Wealth management and the power of planning
Tailor financial plan around one’s goals and dreams
Wealth management is a comprehensive and holistic investment process that integrates the long-term goals of an individual with financial solutions, using a consultative approach.
However, many advisors don’t spend the time to really understand their clients’ goals and dreams. They don’t incorporate important pieces of information into a comprehensive plan designed to achieve goals within a reasonable time utilising the following: A well-crafted financial plan
● Developing a formal document that lays out a client’s financial plan is an important aspect of a wealth management process.
The value of the plan is that it takes the intangible process of financial planning and makes it real.
You can read it, understand it, refer back to it, and share it with family members and friends. It is also very important for the wealth manager so that she can reference the plan during review meetings and put the plan’s performance into a long-term context.
But wealth management goes beyond the client’s investments. The goal of every wealth manager is to be the “chief financial officer” of their client’s entire financial life. This work extends to estate, retirement and risk planning.
● Important considerations when creating a plan
By discussing all aspects of the client’s financial life during the discovery and planning meeting, managers identify specific activities to focus on as they move the client closer to their goals. Some aspects to consider include the following: Investment Planning
● It’s often said that many people spend more time planning a two-week vacation than they do on their investment plan. The investment planning process should result in an estimate of the return needed to accomplish an investor’s objectives, taking into account that client’s unique goals, time horizon, current asset base, tax sensitivity, and risk tolerance, among other factors. Retirement Planning
● Planning for your retirement is not something to be taken lightly.
This is because your retirement savings are probably your biggest asset. So you need to be aware how your choices now will affect you later in life.
When you retire you are faced with a bit of a problem; it is not easy to reverse the choices that you made earlier in life.
With careful planning, a commitment to saving and an understanding of your options, you can achieve a financially secure retirement. Risk Planning
● Risk planning is necessary both to protect your assets and to provide for your loved ones after your death. It can involve the protection and proper management of your wealth in case of death, disability and illness. Tax Planning
● Tax planning is the art of arranging your affairs in ways that postpone or minimise taxes.
This is done to align your financial goals and objectives with a tax efficient plan. A wealth manager will assist you to meet all elements of your financial plan in the most tax efficient manner. The main objective for tax planning is to apply the current tax laws to your financial situation, in order to reduce your taxable income for the period. Estate Planning
● Having a will and planning to protect and preserve your wealth is one of the most important things that you will ever do. Effective estate planning means that you retain the maximum amount of wealth possible for your intended beneficiaries. Or, you may have a large estate, and minimising any potential estate tax impact is your primary goal. Here, you will need to use more sophisticated techniques in your estate plan, such as a trust.
Wealth management can only add value if, and only if, it’s relevant to the personal needs of the client. For more information contact Inkunzi Wealth Group on 087 160 0018, or e-mail us at invest@iwgsa.co.za.