Wealth Management is Self-Improvement Endeavor

by Blake Herzog

“Wealth management” by name alone implies that it’s for people who are, well, wealthy. 

But it is something everyone should play an active role in and consider a self-care ritual; one of the most important they to take on. 

There are so many key steps that can be taken on your own to put your present and future on solid financial footing, which will improve your mental as well as financial stability. 

Pursue peace of mind: Keep an emergency fund in a savings account or short-term CDs that can cover three to 12 months of expenses. Try to save even more if you’re working in a field where new jobs are scarce. This is critical for protecting yourself against unexpected job loss or medical bills and lets you not panic when something threatening comes up on the horizon. 

Set your intention: Know how much you want to save for retirement. Many experts suggest saving 10 times your annual income. The number really depends on what kind of lifestyle you want to enjoy once you are finished working.

Assess your options: Look into every type of retirement savings account available to you, whether it’s a 401(k) plan at work, an IRA (either traditional or Roth) or whichever other product works best for your future.

Embrace the unknown: Don’t shy away from investing some of your savings in the stock market where it’s likely to multiply much faster and farther than most savings accounts. But do keep an eye on the effect current economic and political conditions are having on the market.

Take preventive measures: Carry all the insurance you’re going to need, including life, health, home and vehicle.

Consider your legacy: Do some basic estate planning — draft a will, power of attorney, advanced medical directive, living will and other essential documents.

Calling a Professional

You may need an attorney to help ensure your estate documents are binding, and there are certainly other situations where bringing in either a wealth manager or financial adviser would be a wise move. For instance:

If you’re experiencing or planning a major family life change such as parenthood or divorce. Even couples seriously dating may want to drop into an office to get a sense of where they stand on financial issues, which have doomed many a relationship.

You’re seeing a rapid increase in your wealth through a job change, inheritance or other means. An adviser or manager can make sure the influx of cash isn’t being overspent and is being invested wisely and managed for tax purposes.

If retirement is on your horizon, or already here. A specialized planner can help you figure out what your goals for that phase of your life are and what steps you need to take to achieve them. Some of the planners you consider may boast a retirement-specific credential after their name, but make sure it’s one with teeth that isn’t that easy to earn.

If you have too many investments to be able to monitor each one closely, or if you have little interest or aptitude in tracking the money you spend or invest, bringing in an adviser can be an especially good idea.

Wealth managers and financial planners take different approaches to the responsibility of managing your finances, though both generally set a minimum net worth for clients before beginning.

Besides generally working with higher net-worth clients, most wealth managers provide holistic services addressing all areas of their clients’ financial lives from tax work to legal and estate planning. Many financial planners, on the other hand, have a specialty such as investing, accounting, life insurance/estate planning or others often based on the kind of certification they have.

Two of the most well-known and rigorous certification programs are Certified Financial Planner (CFP) and Chartered Financial Consultant (ChFC). Both ensure their holders have a well-rounded knowledge of financial planning and can work effectively in most aspects of your financial life.

Certified Public Accountants (CPAs) are keen at organizing investments and reducing tax burdens, while Chartered Mutual Fund Counselors (CMFC) help investors navigate the complexities of such large funds. A Certified Alternative Investment Analyst (CAIA) focuses on alternative types of investments, including real assets, hedge funds and commodities.

Most charges are assessed as a percentage of the total amount of wealth being managed, while some advice is available on a flat-fee basis. “Fee-only” advisers earn their income solely from fees paid by their customers and not from commissions for selling certain financial products. This model can eliminate most conflict-of-interest issues but tends to be more expensive than some customers can afford.

Financial self-care is really about the same concepts as the more traditional understanding of the term — getting to really know yourself and your desires for now and in the future, as well as having the resources to remain calm in a crisis so you don’t make ill-advised decisions or suffer needless amounts of damaging stress.

Greater Prescott is home to many wealth managers and financial planners who can help you reach that place. Working with a planner who lives and works in your community means you’re more likely to be talking to someone familiar with the costs of living there and how to maximize your potential to live your best life.