Wealth Management

The economy has been in a state of decline for some time now, but that doesn’t mean that everyone’s personal finances have been affected. Many who have put lots of time and careful planning into managing their finances are still out on top. They may even been in search of new ways to grow their already existing wealth and to effectively manage it accordingly. These individuals may need to seek out the services of wealth management professionals.

What is wealth management?

In a few words, wealth management is a service for “high net worth” individuals that financial institutions provide to assist them in protecting and growing their wealth. This usually means that a slew of services, like investment management, financial planning, and tax planning (among others) are offered together in one consolidated package. The services offered may be different in each case depending on the requirements of the client.

There are two basic components to the process of wealth management. The first is protecting the client’s monetary assets from creditors, market slowdowns and/or crashes, taxes and other unexpected events that may affect the client’s finances. The second part handles the growth of those monetary assets through active risk and reward assessment programs that are tailored to suit the needs of the client.

What are the types of wealth management?

Instead of different types of wealth management, institutions typically offer different services that all fall under the umbrella of the process. Many institutions offer services like these:

  • Insurance planning is assistance in choosing the best types of insurances and insurance agencies that best suit the client’s needs.
  • Tax planning helps to minimize returns from taxes, which may lead to things like donations to charities which will allow for the receipt of greater tax benefits.
  • Asset protection entails financial professionals attempting to get a sense of the client’s lifestyle and consequently giving advice on how to maintain that lifestyle while dealing with things like taxes, inflation, volatility, creditors and lawsuits, as well as any other potential threats to the client’s wealth.
  • Retirement planning does exactly what it sounds like—professionals give advice on how to manage a large amount of funds in old age to lead to a successful and worry-free retirement.
  • Business planning provides the client with business advice, like how to optimize the tax-free advantages of running one’s own business.
  • Estate planning helps the client protect themselves and their estate from lawsuits, taxes and creditors. This service is especially useful for those with exceptionally high net worth.
  • Investment planning provides the client with advice on how to best align their investments with their personal investment goals and interests.
  • Business succession planning aids clients in the best ways to pass on their business when the time comes in a way that will maximize returns.
  • Wealth transfer allows the client to pass on their wealth to their dependents, or to whomever they choose.

While these services are typical of wealth management plans, this is by no means an end-all-be-all list. The services offered to each client are based on their own needs.

Who needs wealth management?

If you’re one of the many Americans who struggle with debt on a regular basis and lives paycheck to paycheck, wealth management services are not likely your best option. These services are usually reserved for those with high net worth, which would usually mean that they required outside help in managing the vast amount of wealth they have accumulated. If you are one of those individuals who don’t know how to manage the large sum of money in your possession, you may want to check into wealth management services.

What are the benefits of wealth management?

One of the main benefits to wealth management is that it helps reduce taxes associated with capital gains, the client’s estate and their income. Since their taxes are likely to be sizable because of their massive wealth, this can be a huge benefit. Wealth management professionals can also help protect the client’s assets from poor judgement by outside parties, as well as from creditors.

These services can also help the client improve their financial yields while diversifying their funds more and with the implication of less risk. The client would also receive assistance with managing various liabilities like mortgages and college funding, among others. Managing a large amount of wealth can be very confusing, so the help of professionals may end up saving a lot of hardship and heartbreak down the road.