Wealth management is a set of strategies designed to help any person, family or organization manage their finances and achieve their long-term financial goals. These services may include simple investment advice, complete financial plans, estate/succession planning, and more.
A wealth manager is an advisor to a client and obligated to act in their best interest. They typically offer a range of fee structures, with some charging a flat rate and others charging commissions.
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Financial Planning
Financial Planning is the process of ensuring that your income, expenses and savings meet your financial goals. It is an essential part of a comprehensive wealth management plan.
Financial planning focuses on a variety of areas, including tax, investments and retirement. It may also include developing estate plans and succession plans for business owners.
Wealth management focuses on helping high-net-worth individuals preserve and grow their wealth. This is a more advanced approach to financial management than traditional financial planning.
The main difference between these two types of financial services is that wealth managers typically charge their clients based on the amount of assets they manage for them. They are also more proficient in risk management, capital budgeting and portfolio management.
Wealth management is a more lucrative career than financial planning, but it can be more difficult to break into. In addition, wealth management firms have minimum investment requirements that limit who can use their services.
Investment Management
Investment management is the process of overseeing a financial portfolio that contains a variety of assets. This includes the purchase and sale of assets as well as the creation and execution of a portfolio strategy.
Asset management companies help investors decide the type of investments they want and set their investment goals and risk tolerances. They manage the day-to-day management of portfolios, including opening accounts, placing trades, and handling tax strategies.
Wealth managers offer more complete services, including legacy planning and philanthropic planning. They can also guide education planning, insurance, and retirement planning.
For their services, investment managers typically charge a percentage per year of the client`s invested assets. Managed account services are usually offered by investment professionals at the firm. These accounts can be traded on the client`s behalf by the investment professional.
Tax Planning
Whether you`re looking to give more to charity, get more money back from a tax refund, save on retirement withdrawals, keep your investments efficient, or maximize your estate, tax planning can make a big difference.
Tax planning`s main purpose is to reduce one`s tax liability. This means making the right investment choices, replacing assets with suitable ones, diversifying income and business activities in order to maximize tax-saving opportunities.
Tax planning is also important to ensure that taxes are saved in a legal way and conforms to regulations. This helps avoid tax evasion, which may lead to legal liabilities in the future.
Tax planning can also help individuals and businesses assess if their current business structures require modification to increase profits or revenue. They may be able to identify other opportunities that will allow them to transition from consumers to producers of goods or services.
Estate Planning
When you have worked hard to grow your wealth, it`s natural that you want to pass it along to your loved ones in the most tax-efficient manner. This goal can be achieved with estate planning.
No matter how wealthy you are, an estate plan is essential to ensure that your assets are protected and distributed in the manner they wish.
A comprehensive estate plan also includes documents that tell your loved ones who should get what, names a guardian for your children and allows someone else to make decisions on your behalf in case you become incapacitated or die.
Estate planning is essential for anyone who owns a home, investments, life insurance policies or retirement accounts. It`s especially important for people with a family history of high medical expenses, as it can allow your assets to be protected by Medicaid and other government programs.