Wealth management is a 360-degree view of your financial life. When most people hear the term Wealth Management, they believe it has to do with managing your investment portfolio. The reality is that your investment portfolio plays a significant role in reviewing your Wealth Management plan, but it is only one piece.
What does wealth management include?
What are you trying to accomplish with your wealth? Are you saving to purchase your first home? Be able to retire? Or are you trying to ensure that you have enough income in retirement to live your dream life? Once you have determined your primary goal, the next step is to put some objectives around those goals. Here are some examples:
- I want to be able to purchase my first home for approximately $1,000,000 within the next five years.
- I want to be able to retire by age 60 with an annual income of $100,000 after tax indexed to inflation until age 90.
- I want to maintain a retirement income of $100,000 after tax indexed to inflation until age 95.
Once we have determined the primary goal, the next step is to examine your financial situation. Here are some of the variables.
- What is your current and expected income?
- What are your current and anticipated expenses monthly?
- What is your current net worth, including lifestyle assets and financial assets?
The critical next step in developing your Wealth Management Strategy is to input all of this information into Financial Software. There is some outstanding technology available today to help put all this information together. Check out some useful tools for financial planning here.
These are the first steps necessary to develop a Wealth Management plan. Other areas to be explored are as follows.
What is your investment strategy?
Is your portfolio positioned to meet your objectives? Here are some other considerations.
- Is your portfolio adequately diversified?
- How is it going to be invested?
- What fees will you be paying annually for my investment portfolio?
What is your income tax strategy?
- What are your current and projected taxes?
- What is your average tax rate, and what is your marginal tax rate?
- Have you positioned your portfolio to take advantage of all the possible tax breaks?
If we are saving for retirement, what is our current savings? Will that enable us to meet our objectives?
If you’re in retirement, what are your different sources of income, are they indexed to inflation? Are they guaranteed?
Once we have determined our savings and income, the next step to explore is whether our income is protected? If you’re saving for retirement, the most important asset you have is yourself.
- Do you have disability insurance in place?
- Do you have critical illness insurance in place?
- Do you have life insurance in place for yourself and your family?
The next stage in our wealth management journey starts with exploring your existing Estate Plan.
- Do you have a current will in place, and does it reflect your current wishes?
- Do you have powers of attorney for property and personal? Do they reflect your current wishes?
Other areas that may need to consider.
- Do you have children who would like to attend college or university?
- Do you have your own business?
- Have you incorporated your corporate strategy into your strategy if you have your own business?
- Do you have any outstanding non-deductible debt? What is your plan to reduce it?
A Wealth Management Plan looks at all your areas of your financial life. A great Wealth Management Plan will answer all of these questions and more. The best time to start is today. Contact our team of experienced wealth management advisors for a consultation!
