Wealth management is a process that most folks don’t have to worry about. That’s because the majority of people continue to live paycheck to paycheck, with little to nothing left over at the end to put towards financial planning and investment.
However, for individuals who find themselves sitting on significant net worth, wealth management is a very real thing. What’s more, it’s a critical component of any effort to make the most of one’s hard-earned money.
Generally speaking, wealth management is for those with $500,000 or more in net worth. If this describes your situation (congratulations!) and you’ve yet to work with a financial advisor, now might be a good time to get started.
Here are six examples of what wealth management can do for you:
Financial Planning
Financial planning is a practical course of action regardless of one’s net worth. However, the more wealth you have, the more important it becomes to plan your finances. While it’s theoretically possible to do so yourself, it’s ill-advised unless you have a firm grasp on the complex world of finance. Otherwise, you’re better off finding a reputable financial advisor to manage your wealth on your behalf. They’ll analyze analyzing income, expenses, assets, liabilities, and risk tolerance to develop a customized financial plan that fits your long-term goals.
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Investment Management
Wealth management provides professional investment management services that help clients maximize returns and minimize risks. This includes developing an investment strategy, managing investments, and monitoring the performance of the portfolio. Wealth managers can access a wide range of investment vehicles, such as stocks, bonds, mutual funds, and alternative investments, to help clients achieve their financial goals.
Risk Management
It’s often said that a fool and their money are soon parted. While nobody is suggesting someone sitting on a sizable fortune is a fool, the point is that someone with insufficient expertise can easily find themselves in financial ruin, no matter how much money they had at the start. Professional wealth management in Houston and other cities, conducted by certified fiduciaries, mitigates risk and maximizes returns. While there’s no way to completely eliminate risk, and no guarantee of substantial returns, financial advisors with experience managing six-figure or higher portfolios are suited for the task.
Tax Planning
Everyone knows the more you earn, the more you pay in taxes. While not paying taxes is against the law, there’s nothing illegal about finding ways to reduce your tax burden. Since the potential tax being paid by wealthy individuals is on the order of tens of thousands of dollars or more, it’s in your best interest to have financial experts help with tax planning. Doing so will minimize the amount of tax you owe at the end of the year without running the risk of getting into trouble with the authorities.
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Estate Planning
As one’s wealth increases, so does the importance of estate planning. An estate worth several million dollars can collapse under its own weight in the aftermath of your demise without a proper plan in place. Heirs file lawsuits, monies wind up in probate, and nobody comes out as the winner besides the state. With this in mind, it’s essential for those with significant net worth to include estate planning as part of their wealth management strategy. Once again, the best way to do that is to hire a financial advisor to do so on your behalf. Hiring an estate lawyer doesn’t hurt, either.
Reassurance
While it’s easy to think being wealthy means never having to worry about anything, that’s simply not true. As the late Biggie Smalls said, “[More] money, [more] problems.” Being responsible for the proper management of personal wealth is exhausting, which is makes wealth management the best solution. By having professionals manage your wealth on your behalf, you enjoy greater peace of mind knowing your money is being looked after by people who know what they’re doing.
The way of the world is such that most people lack the kind of wealth that requires professional management. But for those who do, wealth management is critical to ensuring that money is put to good use and shielded from risk.
Julie Steinbeck is a freelance writer from Florida. She enjoys writing about business, finance, health, and travel.