There is no shortage of people offering financial advice. There are Financial Coaches, Financial Advisors, Financial Planners, Wealth Advisors, Wealth Managers and on and on. As a consumer, it can be difficult to tell who is offering what and which person is the right fit for you.

I’ve already written about the difference between a Financial Advisor and a Financial Planner. I also wrote about the most common types of financial professionals and touched on what they do.

But I haven’t yet explained exactly what Wealth Management is and what a Wealth Manager does.

What is Wealth Management?

Wealth Management is a set of services offered to high-net worth individuals and families that combines Financial Planning, Investment Portfolio Management, Tax Planning, Insurance Planning, Estate Planning, and Behavioral Coaching.

The goal of Wealth Management is to optimize a client’s finances so that they get the most out of the wealth that they worked hard to build.

Let’s look at each element of Wealth Management to see how they all fit together.

Financial Planning

Financial Planning is the foundation of sound Wealth Management. The process will reveal your goals, risk-tolerance, and the job that your money needs to do for you.

Those facts will inform how your Wealth Manager recommends you invest your money.

Investment Portfolio Management

Using what they learned while building your Financial Plan, your Wealth Manager can develop a portfolio of investments that is carefully tailored to your values, goals, risk-tolerance, and overall comfort with investing.

While it is possible to develop an investment portfolio without a Financial Plan, that portfolio may have blind spots that could hamper your success in the future.

Tax Planning

Tax Planning is not always part of a Wealth Management relationship, but I think it should be. While your Wealth Manager can’t replace your CPA or other tax advisor, allowing your tax situation to inform advice around investments, where to save, how to use your wealth in retirement, and meeting charitable giving goals may help all those things happen more efficiently and smoothly.

When you give your Wealth Manager more information to work with, their guidance maybe crafted to fit you even more closely.

Insurance Planning

Building your wealth is just the beginning. As you are building it and once you’ve built the wealth you need for your goals, protecting that wealth is an important element of sound Wealth Management.

One unexpected disaster can undo years of hard work.

Diligent Insurance Planning means making sure all your insurance coverage is appropriate to your needs. Most Wealth Managers will consider Life Insurance coverage and maybe Long-Term Care Insurance coverage.

But a thorough Wealth Manager will check in on your property and liability insurance as well as your health insurance.

Your Wealth Manager won’t replace your insurance agent, but they coordinate with them to keep you protected.

Estate Planning

Estate Planning is not always part of a Wealth Management relationship. And your Wealth Manager cannot replace your Estate Planning Attorney.

But they can support your estate planning goals. For example, if I know a client feels strongly about leaving a legacy to their heirs, I can gear my advice to serve that goal.

I can also include that goal in their Financial Plan.

An Estate Planning Attorney is a must for making an estate plan and drafting the documents to formalize that plan. But that’s where many estate plans end. Your Wealth Manager can help you implement and coordinate with that plan.

Behavioral Coaching

Behavioral Coaching is one of the newest offerings under the Wealth Management umbrella. As with Tax Planning and Estate Planning, not all Wealth Managers offer it.

In my opinion, Behavioral Coaching is a vital service for most Wealth Management clients.

Why? Because good financial decision making is not always intuitive. In the past decade I’ve seen more than a few clients with biases and cognitive errors to overcome.

Those biases and cognitive errors can pull you off track and make reaching your goals harder. Avoiding mistakes can be a key factor in long-term success.

Wealth Management isn’t for everyone. Not everyone has wealth to manager, yet. Some with wealth don’t want all the services a Wealth Manager offers.

But there is a group for whom Wealth Management can be a powerful tool for building, protecting, enjoying, and passing on wealth.

Want to learn more?

Schedule your free one-hour consultation today!

The information offered is provided to you for informational purposes only. Robert W. Baird & Co. Incorporated is not a legal or tax services provider and you are strongly encouraged to seek the advice of the appropriate professional advisors before taking any action.

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