What is Wealth Management?

Our profession is often misunderstood. When a new acquaintance inevitably asks: “What do you do?” I say that I’m a CPA and a financial planner with an independent, fee-only wealth management firm – I help families with their financial decision-making.

“Wealth management, huh?” This typical response is followed by comments about the direction of the economy or which stock is ripe for outperformance. Very few will mention topics such as upcoming tax law changes, protecting one’s estate or arming future generations with the tools they need to be financially successful.

It’s no wonder most consumers are unfamiliar with our role, left to believe that all we do is invest money. The financial services industry is wide and varied, using multiple terms to describe itself and its professionals. Terms like financial advisor, wealth advisor, investment manager and money manager seem to be used interchangeably. More and more, advisors and firms that focus solely on investment management are terming themselves “wealth managers.” Why? Perhaps for the air of sophistication it lends to their marketing materials or to try to differentiate themselves from a competitor down the street.

It also may simply be because investment advisors – traditionally focused on adding value through selection of specific stocks or actively-managed funds – have repeatedly failed to deliver on their value proposition. How, then, would these advisors contend they add value? One way is to claim that they are not only managing investments, but overall wealth.

Our intent is not to generalize about every “wealth management” firm and who is (or who is not) delivering true wealth management services to their clients, but we’ll share our view with you. Wealth management:

• Is the holistic integration of people and information in financial decision making. This integration is best achieved on a real-time basis, with all relevant advisors involved in the decision making and aware of the coordinated strategy.
• Encompasses a variety of areas – investments, tax, estate planning, risk management, cash flow and budgeting, and legacy planning, to name just a few.
• Delivers the greatest value to a client through a team of advisors who can each provide unique expertise on these issues, seamlessly developing recommendations as a team to accomplish the client’s objectives. No one advisor bears the load of knowing every answer to a client’s question; rather, the team is tasked with finding the best answer, taking into account all known information about that client.

However, the value of integration lies not only in the coordination of expertise, but also through the ability to deliver this type of experience in a cost-effective manner.

The result of a successful wealth management experience is ultimately a long-term relationship between a client and his or her team of advisors. The relationship is one of open communication and understanding, where advisors act with the client’s best interest in mind at all times. It functions on a proactive and reactive basis, constantly adjusting to changing circumstances.

As wealth managers, we do more than just invest money. We also provide clients with the confidence of knowing that they can rely upon a team of financial professionals to help them make their next decision.