The following blog post is an excerpt of the WorthPointe e-book, The Informed Investor. We created The Informed Investor to show you a Nobel Prize–winning approach crafted to optimize your investment portfolio over time. We have designed it specifically to not only support you in your efforts to preserve what you already have, but to also efficiently capture the market’s returns for your investments. Receive a complimentary copy.
We define wealth management as a formula:
WM = IC + AP + RM
Investment consulting (IC) is the astute management of investments over time to help achieve financial goals. It requires advisors to deeply understand their clients’ most important challenges and then to design an investment plan that takes their clients’ time horizons and tolerance for risk into account and that describes an approach that will maximize clients’ probability of achieving their goals. It also requires advisors to monitor both their clients’ portfolios and their financial lives over time so that they can make adjustments to the investment plan as needed.
Advanced planning (AP) goes beyond investments to look at all the other aspects that are important to your financial life. We break it down into four parts: wealth enhancement, wealth transfer, wealth protection and charitable giving. In our experience, very few financial advisors offer these services.
Relationship management (RM) is the final element. True wealth managers are focused on building relationships within three groups. The first and most obvious group is their clients. To address their clients’ needs effectively, they must foster solid, trusted relationships with them. Second, wealth managers must manage a network of financial professionals—experts they can call in to address specific client needs. Finally, wealth managers must be able to work effectively with their clients’ other professional advisors, such as their attorneys and accountants.
Our focus in this resource guide will be on the first element of wealth management—investment consulting. But bear in mind that managing your investments is just one part of a comprehensive approach to your financial life. At the end of this guide, we’ll describe what you should expect from a true wealth manager so that you can make an informed decision when choosing which financial professional to work with.
Read the full chapter in The Informed Investor.
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