Why wealth managment is meant for everyone

Defining the term Wealth Management

Wealth management can be defined as an umbrella term used to cover a various services provided to individuals and families by a wealth management professional.

The Services can include but not limited to advice on financial planning including retirement and investment strategies, estate planning, tax and accounting services and more. More often than not, the wealth manager relies on a team of specialists, including accountants, securities brokers, insurance, and estate planning professionals to determine the best course of action in managing a client’s wealth and assets.

How Wealth Management Can Apply to Everyone

It is well known that wealth management is an investment advisory service for high net worth individuals and it combines both financial planning and specialized financial services, including personal retail banking services, estate planning, legal and tax advice, and investment management services.

Wealth management can now be broken the spectrum of wealth into three groups. They include:

1. Little Wealth: This goes for those with little resources; one may not be able to afford the associated services or products for the management of their limited wealth. They may be able to keep a roof over their head and food on the table but have no extra resources to protect their limited wealth.

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2. Moderate Wealth: With greater abundance, which could be characterized as being in “the middle class,” allows for more options and the greater likelihood that individuals and families can afford to implement techniques or products to grow, protect, utilize or disseminate their wealth.

Also, this can include, buying certain types of insurance policies, planning for education or retirement or engaging the services of an estate planning attorney. These different processes, services or products, are more often obtained from different providers or firms. There is no or little coordination between the providers.

3. Great Wealth: With more assets there are greater complexities and more options to wealth management. With greater wealth, it is more prevalent to adopt an overall or encompassing approach or interconnected level of services. This is the level of services that the industry or press and media often refer to as “wealth management”. Most firms offer the truly affluent one of two approaches to wealth management. They include:

Collaborative approach: In this situation a firm or an individual will often act as the hub of a team of advisors. This approach can include a Certified Financial Planning professional (CFP) providing the financial planning processes and investment management but in coordination with the individual or family’s other advisors (tax, legal, insurance, etc.). By doing so, there is an integrated approach to growing, protecting, utilizing and disseminating the clients’ wealth.

Single office approach: This kind of approach is more often than not offered by big banks, brokerage firms or what are known as family offices. The firm will have staff that deals with particular areas such as investments, others for risk mitigation, and will have professional staff for estate planning, and tax planning, etc. and they are all in one office.

Broker-dealers have been quick to see the value in supporting their advisors in providing additional services to the wealthy. LPL Financial Services as an example, within the past few years, acquired a mortgage company, a general insurance agency and trust company to be able to sell additional services to their advisors’ clients.

At this juncture, it is absolutely germane to note that no matter your level of wealth, it would be worthwhile to determine how you plan to grow, protect, utilize and disseminate your wealth. Thus, wealth management is key to individuals and families.