Navigating the world of financial planning can be overwhelming, especially when you’re trying to distinguish between similar-sounding terms like investment and wealth management. While the two may seem interchangeable, they represent distinct financial planning approaches. According to Puai Wichman, investment management focuses solely on managing a portfolio, while wealth management takes a more comprehensive approach to helping individuals manage their entire financial situation. Understanding the difference can clarify your options when choosing an advisor and help you identify which type of management aligns best with your financial goals. So, before asking yourself if you need a financial advisor, it’s important to understand the differences between these two types of management and how they can benefit your financial well-being.
Investment Management Versus Wealth Management
Investment management is a crucial aspect of financial planning. It involves more than just buying and selling stocks. Investment managers use a variety of strategies to manage and maintain a diversified portfolio to maximize value. Puai Wichman says working with a broker or advisor can help you determine your investment goals and risk tolerance level and find an investment manager who fits your needs. Not all investment managers are created equal, so ask about their fiduciary standards and registration status to ensure you work with someone who prioritizes your best interests. If you’ve got a handle on other aspects of your estate, an investment manager might be just what you need to take your financial planning to the next level.
Puai Wichman explains that investment managers focus solely on your investment portfolio but also consider your financial goals and risk tolerance. It’s all about planning for your financial future. An investment manager accomplishes this by rebalancing your portfolio as needed and adjusting for lower risk tolerance the closer you reach retirement age. It is just a small part of their job; it’s also essential that your investment manager regularly consults with you on life changes and portfolio adjustment needs. However, ensuring that your investment manager acts as a fiduciary rather than in their financial best interest is crucial, which is how they typically receive compensation. Wealth managers take a more holistic approach, considering all aspects of your financial health and estate needs. The wealth management process is a fully customized solution to achieve financial goals and reduce stress.
Wealth management is more than simply investing your money into the right stocks. It’s a careful process of fully understanding your financial goals and every aspect of your financial life. And because life is constantly changing, your wealth manager dedicates their time to understanding these changes and adjusting your plan accordingly. They’ll work closely with subject matter experts, such as lawyers and tax accountants, tapping their expertise to ensure that your financial goals are met. It’s all part of the holistic nature of wealth management, which requires a solid and dedicated relationship between you and your wealth manager. It’s a process that requires both time and expertise to eliminate financial stress and help you achieve your dreams. Unlike an investment manager, who manages your portfolio, a wealth manager is there to help you achieve true financial well-being.
If managing your finance and estate planning is not your cup of tea, opting for a wealth management service might be your best bet. You are seeking ease of convenience, and wealth management will cater to your financial and personal well-being. The complexities associated with more significant estates can be overwhelming and taxing financially and emotionally. The investment manager might be a better fit for those comfortable and confident in managing their estate needs, like family planning, tax strategies, and insurance requirements, without any assistance. But Puai Wichman emphasizes that wealth management is your best route to avoid the headache of comprehensive planning. It ensures that you don’t have to navigate your way through the financial labyrinth alone.
Puai Wichman is the founder and CEO of Ora Partners, an international trust provider and wealth management firm dedicated to helping families and individuals protect personal and corporate wealth.