Wealth Management

Every client has unique needs and objectives they hope to achieve. With wealth management, we weigh your goals and risk tolerance while addressing your investment needs.

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Applying Wealth Management Strategies

Wealth management is only a portion of our process. It forms one of the Seven Pillars of Financial Success that are cemented in a single financial planning foundation. These management strategies generally revolve around the four phases of the wealth life cycle and include accumulation and growth, wealth preservation, decumulation process, and wealth transfer.

Accumulation and Growth Phase

Many of our clients want retirement savings they can count on to help maintain the lifestyle they want in retirement. With today’s volatile environment, they are looking for strategies that can help them grow their assets. Coupled with concerns about market downturns, rising healthcare costs, and longer life expectancies, the desire for accumulation planning becomes clear.

Accumulation planning. Accumulation planning is an aspect of wealth management that requires different expertise than typical investment planning and bond portfolio implementation. It begins with the simplest strategies that revolve around living within your means, embracing low-cost investing and long-term strategies, and avoiding mistakes like allowing emotions to guide decisions. It also encompasses more complex strategies pertaining to employer-related retirement plans and stock options, margin strategies, and real estate exchanges. Another strategy during this phase also applies the power of tax deferral.

Alternative investments. These types of investments may also be an option for the right investor. One of the premier features of alternative investments is diversification, which results from the inclusion of investments that react differently to the markets than more traditional investments. Examples of alternative investments include managed futures, hedge funds, oil and gas, tax shelters, and real estate. Though most investors understand that as risk increases, the potential for return can also increase, these products generally involve substantial risk and limited liquidity.

Wealth Preservation Phase

Risk management. Wealth management requires a deep understanding of your tolerance for risk and behavioral tendencies, especially during periods of market volatility. By quantifying that risk with a Risk Number, we help clients manage emotions, cognitive biases, and the natural tendency to take action during periods of volatility.

Asset allocation. Allocation is also a strategy used as part of a robust wealth management strategy. Asset allocation aims to balance risk and reward by allocating your portfolio’s assets among a variety of investment categories and according to your goals, level of risk tolerance, and investment horizon. The process aims to:

  • Reduce overall investment risk
  • Create more reliable investment forecasts
  • Improve the risk and return tradeoff of your portfolio

Investors should note that asset allocation and diversification do not assure profit or protect against loss in declining markets, and neither can guarantee that any objective or goal will be achieved. Alternative investments may be illiquid in nature, may be redeemed at more or less than the original amount invested, are subject to special risks, and are not suitable for all investors. There is no assurance that the investment objective will be attained.

Decumulation Process Phase

The approach investors take must change as they transition into retirement. The decumulation stage is where wealth management becomes more difficult with taxes, tax-advantaged wealth transfer, and estate planning.

Decumulation. The decumulation phase is the process of withdrawing money from your retirement savings to support your living expenses during retirement. Managing spending and taxes comes to the forefront, often caused by required minimum distributions (RMDs) and taxable income streams. Depending on your needs, income strategies, inflation, hedging alternatives, and annuities may come into play during this stage.

Here are some tips to help you manage the decumulation stage:

  • Start planning early. The earlier you start planning for retirement, the more time you will have to save and invest your money. This will give you more options when it comes time to withdraw money in retirement.
  • Rebalance your portfolio regularly. As you get closer to retirement, you should adjust your portfolio to become more conservative. This can help to reduce your risk of running out of money in your retirement.
  • Consider your tax situation. You should consider any tax implications when withdrawing money from your retirement savings. This is where tax-efficient investments and strategies can help minimize your tax liability.
  • Seek professional help. A financial advisor can help you develop a decumulation strategy based on your needs. They can also help you manage your investments and track your progress.

Wealth Transfer Phase

Wealth transfer. The wealth transfer stage of wealth management is the process of transferring assets from one generation to the next. This can be done through a variety of methods, including gifts, trusts, and inheritances. Some of the benefits of wealth transfer include preserving family wealth, reducing estate taxes, and ensuring assets are used in a way that is consistent with your wishes. Several risks should also be considered. Wealth transfer can be complex and time-consuming, can lead to family conflict, and may not guarantee your wishes are met.

When planning for a wealth transfer, it is essential to consider the following factors:

  • Tax implications. The transfer of assets may have tax implications for both the original owner and the beneficiaries.
  • Beneficiary needs. The needs and goals of the beneficiaries should be considered when planning for wealth transfer.
  • Owner wishes. The original owner’s wishes should be respected when planning for a wealth transfer.

If you are considering wealth transfer, it is important to work with a financial advisor to understand the risks and benefits, and to develop a plan that meets your specific needs and goals.

Get our handy list of 12 tax reduction strategies.

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