Wealth Management services can be characterized as applying a comprehensive approach not only relating to investment management, but multiple other activities focused on growing our clients’ wealth over the course of their lives. It is not just investment advice. It is not just a one-time retirement projection. It is not a single tax efficiency review.
The distinction lies in combining financial and retirement planning, investment management, tax reduction planning, risk mitigation assessments, and estate planning, and then, importantly, taking those recommendations to the next phase by providing for the implementation of recommendations, ongoing monitoring and adjusting those plans as they change and evolve. Wealth Management is an ongoing process which endeavors to make changes as internal and external factors change.
Internal factor changes can include life events such as retiring, getting married, buying a home, receiving an inheritance, getting divorced, changing jobs, having kids, health changes, etc. We update plans across the board when life events change a plan’s accuracy or direction.
External factor changes are non-life events such as tax law changes, economic shocks, changes in market expectations and conditions, or unfortunate events such as natural disasters. As each of these can also impact planning assumptions, a comprehensive wealth management approach evaluates the impact of those changes, making adjustments to recommendations in order to keep clients on track towards their goals.
The history of the financial services industry has generally been transactional in nature. That is, one’s investment need was evaluated at a point in time, a recommendation was made and implemented, and there was no follow-up or update based on life changes unless the client approached the provider for a subsequent transaction. For example, a couple planning for their first child might seek out an insurance agent to obtain a life insurance policy. The agent would evaluate the need, sell an insurance policy and wait for the client to reach back out in the event of a change in circumstance.
Wealth management, by contrast, is based on a dynamic and ongoing approach where investments, financial assessments, and tax needs are evaluated on an ongoing basis, with recommendations periodically adjusted and implemented as strategies evolve. This requires building deeper relationships with clients in order to have an understanding of the things that are important to them, including any fears and dreams that drive their decisions. It requires not just management of the plan and assets, but often, a deep understanding of a client emotions and views. Those deeper relationships take time to develop as many people can be initially guarded in sharing emotional and/or financial vulnerabilities.
Our approach starts with financial planning. Here, we ask a lot of questions to understand what our clients envision for their future, which we attempt to break into specific “goals”. We try to understand , what it would mean to a client to not reach a goal or for a goal to have to be deferred, and we try to help our clients understand any trade-offs that might be required in order to have a greater chance of meeting their prioritized goals. Importantly, for committed couples, we strive to gather input from both spouses, who may or may not have similar values pertaining to money. As we develop the financial plan, the natural outcome of the process is an understanding of what an appropriate investment portfolio looks like to serve that specific client’s needs while providing for the opportunity to achieve their goals. We don't have cookie cutter portfolios where we try to fit every client to the same portfolio. We try to be thoughtful in designing custom portfolios based on what we learn about our clients.
As Wealth Management is relationship based, it requires conversations, not e-mail exchanges. In 2020, many of these are technology-based conversations. Give us a call to find out more or fill out the contact form below to schedule an introductory conversation.