Wealth Management takes a wide approach to individuals’ finances, including investments, financial planning, taxes, insurance, and estate planning.
Wealth managers most commonly work with high-net-worth individuals. This breadth of services is important for the client with a diverse financial portfolio.
In general, wealth management entails integrating all parts of a client’s financial situation into a comprehensive financial plan. Services that fall under the wealth manager’s purview include:
Wealth managers usually serve High Net Worth Individuals (HNWIs) and business owners who possess substantial assets and complex financial needs. These professionals offer services customized to the unique circumstances of their clients, optimize financial well-being and safeguard wealth over the long-term. HNWI clients typically have a net worth of $1 million or more in investable liquid assets, although this threshold varies depending on the client and the firm.
Wealth managers are especially valuable to navigate unexpected life events that may have an impact on overall wealth, such as the loss of a family member, sudden inheritances, divorce, career transitions, and other windfalls where complex financial considerations come into play.
With sudden inheritances, for example, inheritors may find themselves responsible for managing a significant amount of wealth without prior experience. That’s where a wealth manager can step in and provide guidance on investment strategies, tax implications, and estate planning to help preserve and grow the inherited assets.
During career transitions, wealth managers can handle cash flow management, investment strategies, and retirement planning. They analyze current savings, anticipated expenses, and expected income in light of future financial goals, recommending adjustments to optimize contributions to retirement accounts like IRAs or 401(k)s based on income changes and employer plan eligibility.
For windfalls or large settlements, wealth managers can help clients develop strategies to maximize and safeguard their newfound wealth through prudent investment strategies and smart risk management, including asset diversification, emergency funds, appropriate insurance coverage, and securing professional advice for legal and tax considerations.
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Investment management primarily focuses on the management and growth of investment portfolios. This includes managing investments and seeking to maximize investment returns within the risk parameters set by the client. Services include investment research, monitoring market trends, selecting and managing appropriate investment vehicles, asset allocation, diversifying assets, optimizing portfolio performance and more.
Wealth management, on the other hand, takes a broader approach. It considers the full picture of a client’s financial life. In addition to investment management, wealth management includes services like tax planning, estate planning, retirement planning, and other long-term objectives.
In this sense, investment management is a subset of wealth management. The ultimate output in wealth management is the achievement of overall financial goals beyond investment returns and the preservation and growth of wealth over the client’s whole life.
Choosing a wealth manager or wealth management firm is all about finding the right match for your needs. Some questions to ask are: What is the firm’s size and reputation? Does the firm work with clients of your asset size? How often do you wish to be in contact with your wealth manager? Does your wealth manager have experience with clients in your specific career and family situation? How does the firm structure fees and payments?
A crucial factor in picking the right guide is if your wealth manager is a broker or a fiduciary. Simply put: While brokers are, legally speaking, salespeople, a fiduciary is obligated to put your needs first and clearly disclose potential conflicts of interest.
Investment management consists of a systematic and thoughtful strategy to manage investments. An investment manager will typically select investments while managing the overall portfolio, be sensitive to tax efficiency,, and maintain adequate levels of liquid assets for cash flow needs.
Financial planning, on the other hand, is focused on long-term goals, such as retirement planning, philanthropic giving, and estate considerations. Financial planning includes tax planning and investment recommendations in order to align assets to be consistent with a clients financial goals.
The difference between the two is mostly based on the window of time they strategize for. While an investment manager will focus on fluctuating market conditions, a financial planner will plan for a client’s comprehensive financial goals.
Ferguson-Johnson Wealth Management offers a range of investment services tailored to each client’s specific needs. Our investment approach is rooted in market efficiency, global diversification, and disciplined strategies.
We advocate for a disciplined and diversified portfolio that can effectively meet investors’ needs. By allocating assets across multiple asset classes, we aim to capture returns in various market conditions.
Our investment options include diversified allocations in large-cap growth, large-cap value, mid-cap, small-cap, diversified international, emerging markets, fixed income, and real estate through low-cost index funds.
We focus on passive investing, utilizing ETFs and mutual funds from fund companies such as Dimensional Funds and Vanguard, with an underpinning investment philosophy based on academic research and empirical evidence.
Tax planning is a key consideration, and we strive to incorporate tax-efficient solutions into our investment and financial planning strategies.
At Ferguson-Johnson Wealth Management, we prioritize our clients’ overall financial health by avoiding excessive risk and fees. Our commitment is to act in our clients’ best interests, ensuring their financial security and working diligently to meet their goals.
