What Are the Different Types of Wealth Management?

Wealth management firms, or financial institutions and professional service providers offering comprehensive financial services to help individuals, families, and institutions manage and grow their wealth are extremely important to those who aren’t available or knowledgeable of the complex regulations, rules, and strategies needed to manage one’s money. These firms specialize in catering to high-net-worth individuals and families who have significant financial assets and specialized expertise in personalized financial advice, planning, and management.

When considering a wealth manager, the role or type of services they provide may vary from firm to firm. Often wealth management firms provide a holistic advice approach by combining various types of financial services and management, including investment management, financial planning, tax planning, estate planning, retirement planning, risk management, and more. These wealth managers aim to understand their client’s financial goals, risk tolerances, and unique circumstances to help them develop customized strategies that align with the client’s objectives.

To expand further, wealth managers often specialize in a specific type of wealth management, although they are competent in all forms of financial advising. Investment Management, or the handling of financial assets and alternative investments, is a common type of wealth management most wealth managers excel in. Investment management is not just buying and selling various investments but also includes devising short and long-term investment strategies for acquiring, disposing, and managing portfolio holdings. Wealth managers who specialize in investment management often focus on designing and implementing investment strategies tailored to their client’s goals and risk tolerance. By analyzing various asset classes, such as stocks, bonds, real estate, and alternative investments, and constructing diversified portfolios, wealth managers are able to monitor and adjust investment portfolios to optimize returns and manage risk.

Financial planning and advising is another type of management wealth managers provide. Financial planning and advising involves helping individuals and families create financial plans and strategies to meet their long-term financial goals. Wealth managers do this by assessing a client’s current financial situation, income, expenses, assets, and liabilities. This is then followed by the creation of a comprehensive plan that involves all aspects of finance to achieve the financial goals of the individual or family. By mapping out a plan for budgeting, saving, investing, and retirement planning, wealth managers are able to help their clients manage their finances and hit their short-term and long-term financial goals, while following their preferred risk tolerances, and promoting a safe practice of financial stability and security for the individual or family.

Another important aspect wealth managers offer in their financial services is retirement planning. Retirement planning involves determining the specific retirement income goals of an individual and family and determining the definite actions needed to achieve those financial goals. All individuals and families must think about and plan around their retirement. Wealth managers are able to take on this responsibility and help individuals and families develop certain strategies that they would have never thought of without the assistance of a financial professional. By attacking retirement planning head-on through the tasks of identifying income sources of the client, sizing up their expenses, implementing a cost-saving investment strategy, and managing their assets and risks, wealth managers are able to determine the future cash flows needed to gauge whether a retirement income goal is possible with the current income coming in before retirement and post-retirement. Factors such as lifestyle expectations, desired retirement age, and life expectancy also play a major role in calculating the income needed for retirement. Wealth managers evaluate existing retirement accounts, such as 401(k)s or IRAs, and recommend suitable investment strategies to accumulate the necessary retirement funds needed. They also develop withdrawal strategies during retirement to establish sustainable income. All of these aspects work together to ensure that individuals are able to achieve a comfortable retirement.

For wealthier clients who have multiple properties and assets, estate planning is another aspect of finance wealth managers specialize in. Estate planning commonly refers to the preparation of fiduciary tasks that serve to manage an individual’s complex financial situation in the event of incapacitation or death of the main provider of the family. This type of wealth management planning includes the disbursement of assets to heirs and children, the settlement of estate taxes and debts, and evaluating and resolving the guardianship of minors and pets. Wealth managers are able to collaborate and work with firm-wide resources, such as attorneys experienced in estate law, to properly manage and divide certain assets in the event of one’s passing. By collaborating with clients and estate planning attorneys, wealth managers are able to develop a comprehensive estate plan that includes aspects such as tax implications and cost-saving strategies, family dynamics, and philanthropic goals to develop strategies that preserve familial wealth and transfer assets efficiently to proper family members and individuals. Other steps also include listing and evaluating assets and debts, reviewing accounts, and writing wills and trusts. All of these aspects merge to help wealth managers manage the assets of an individual or family in order to assist them in sustainably growing the family’s wealth, assets, investments, and overall legacy for future generations so that they can experience financial stability and security.

Lastly, a major financial aspect that all wealth managers are familiar with is tax planning. Tax planning is known as the analysis and review of an individual’s or family’s financial situation or plan to come up with cost-saving strategies to pay the least amount of taxes possible within the legal limits of financial regulations and laws. By reducing the tax liability of a client, wealth managers are able to maximize the amount of money individuals and families are able to keep to invest, save, and contribute to retirement plans. Wealth managers excel at identifying tax-saving opportunities to minimize tax liabilities while maximizing financial efficiency. Strategies wealth managers use include tax-efficient investment vehicles, employee-sponsored retirement accounts, charitable giving, and capital gains optimization. By collaborating with tax professionals to ensure compliance with tax laws and optimize tax strategies, individuals and families are able to succeed in achieving their short and long-term financial goals while building safe financial and investment strategies that contribute to the overall financial health of an individual or family.

Other aspects that wealth managers specialize in include mitigating financial and investment risks, philanthropic and charitable giving, and business succession. By understanding and leveraging these diverse types of wealth management, individuals and families can benefit from the professional guidance and the peace of mind wealth managers are able to provide to their clients through the navigation of complex financial situations and scenarios, creation of comprehensive and holistic financial plans, and the overall management of wealth, finances, and assets of a client. This allows wealth managers to ultimately help individuals and families work toward achieving their short and long-term financial aspirations and building financial stability and health for future generations.