If you're new to the concept of wealth management, then hopefully you've already read our article about “What is Wealth Management?”. If you've got the basics, though, then you may still have a few questions, such as “What is the first step to wealth management?” or “What the heck does fee-only mean?”. We've done our best to answer those questions for you.
What is the first step to wealth management?
Easy. Have wealth. If you were born into an affluent financial situation, then you've aced step one. Go find step two. If not, start by building up some savings and maybe working with a financial advisor to invest that money wisely in order to generate some wealth. Or try your hand at winning the lottery. Your call, really.
What is the difference between a wealth manager and a financial advisor?
Depending on who you ask, the answer is either “not much” or “everything.” Basically, both help you manage your money, so in that way, they're similar. A financial advisor, though, focuses on investments and savings specifically and usually doesn't branch outside of that. A wealth manager is more concerned with the overall state of your financial affairs, including liability and trusts.
What the heck does fee-only mean?
Fee-only means that your financial advisor or wealth manager doesn't work off of product sales. If they're fee-only, that means they don't get paid more for recommending a certain product, so they have few conflicts of interest. This means that they're more likely to actually recommend the solution that is best for you, the client, than a commission or fee-based advisor.
I have a diverse portfolio, what else should I be worried about?
A wealth manager can help you assess all aspects of your finances. For example, they may examine your existing portfolio, but find that although you're making good returns on your investments, you're not in a secure financial position. Your financial life is comprised of more than just a portfolio—it also includes taxes, retirement savings, estate planning, and insurance!
Can I just manage my wealth by myself?
Technically, it is your money, so you can do whatever you would like. If you have a large amount of it, however, you're probably someone who would benefit greatly from the assistance of a wealth manager. A good wealth manager devotes time to routinely monitoring and analyzing your finance in order to recommend adjustments or changes to your portfolio. If you were managing your own finances, you may not have the time to do all of that yourself.
