- posted by Richard LaCross, Director, KLR Wealth Management in the Business Blog
Most consumers haven’t noticed yet but confusion again has a foothold in the financial marketplace. I’m not referring to a new insurance product. I’m referring to the true meaning of wealth management. It seems everywhere you turn these days; the wealth management label is showing up all over the various media outlets.
I conducted an unscientific poll this past month asking colleagues, friends, and other professionals what comes to mind when you (they) hear the words wealth management. Most people said investment management. It appears that the companies known for investment advisory services are now incorporating wealth management into their marketing campaigns further confusing the general public with these inter changeable disciplines.
Wealth management is much more than investment management services. A wealth manager is focused on the client, to ensure that all aspects of the client’s financial affairs are being managed appropriately and in accordance with their life goals. A wealth manager must extract important information through a discovery process and listen attentively when the client speaks of goals and dreams. The wealth manager’s goal is to uncover a client’s key financial needs, their worries, concerns and how they want to be remembered, and to whom.
It is the wealth manager’s job to take this information and assist the client in developing a customized financial plan (also referred to as a financial road map) and help with the plan implementation. This advanced planning involves cash flowing planning, tax mitigation, asset protection, and asset transfer. The wealth manager coordinates with other advisors, such as insurance brokers, estate attorneys, and tax professionals to assist with the plan implementation. The wealth manager’s job does not end here.
Monitoring the investment, financial, and estate plan is crucial. It is important that clients understand that financial planning is not a one time event, it’s an ongoing process. The wealth manager meets with the client on a regular basis (at least once a year) to evaluate investment performance and to review the financial plan and update it accordingly for any changes that have taken place. It is important that the investment and financial plan are in sync. For example, there may come a time that the financial plan indicates that a predetermined goal can be achieved with less risk. At a minimum a discussion should take place in this case to determine if the investment portfolio should be adjusted to take on less risk. Financial plans need to be kept current and in focus because of an ever changing investment, tax and legal landscape.
Finally, we in wealth management are constantly collaborating with the advisors who are part of the financial team. As a team, we are apprised of the alternatives and based on thorough current information, we either make changes or roll over to the next year. By having these collaborations, wealth managers stay contemporary because of a cross planning understanding and collaboration. We find the best results in this process.
There is a lot more that can be written on this topic and my objective was to give you, the reader, a better sense of the basic framework of the wealth management process. This is the frame work that my colleagues and I use at KLR Wealth Management. If you have any questions, feel free to contact me at any time.