In a world where ‘wealth management’ and ‘retirement strategy’ are now commonplace buzzwords, David Osborne recently wrote how today’s wealth managers (aka financial planners) do a lot more than select stocks and stare at computer monitors akin to the actors in Wall Street.
To his credit, and OBT is a fan of this philosophy, he said the right one can help you plan your entire financial life! Thankfully the education campaigns are working; people from all levels of wealth are realising how much less stressed life can be when a trusted professional looks after their best interests and provides guidance (that may not happen if left to their own devices).
A common notion is that all a wealth manager does is pick the best shares, bonds, managed funds and the like for clients. To be fair, that is only one aspect of the job.
A healthy and holistic relationship with your wealth manager
To provide a proper overview of the capabilities of a thorough and conscientious wealth manager, David sets out the following checklist. We have reproduced it as a way for you to sense-check the level of service you are currently receiving to make sure your wealth planning takes into consideration a number of factors:
- Actively Creating Your Retirement Plan: Your wealth manager is actively involved in helping to strategise your retirement planning.
- Coordinating across Disciplines: While asset allocation is an expected part of any financial planning role, your wealth manager can also connect clients with accountants, solicitors and insurance agents to help with estate planning, insurance requirements and managing risk.
- Being Free to do what’s in Your Best Interest: Is your wealth manager independent? Many employees who work at large financial institutions may not be inclined to entrench themselves in their client’s financial planning.
- Knowing the Difference between a Nest Egg and Long-Term Financial Stability: Understanding that a nest egg for retirement is not an account to draw from before retirement, or chip away from once retirement is in place. The real necessity for people to understand is that their money needs to be working for them and producing income during retirement.
- Annual Meetings: Monitoring your progress should be an annual event (at minimum) with your wealth manager. It might involve computing your net worth to determine if you are on track, falling behind or ahead of schedule. It can also serve as a great time to review how to handle bonuses, inheritances and other windfalls.
- Education on Your Safe Spending Rate: While few like spending limits, having your eyes wide open about the short-term and long-term impact is key.
- Access to Real Wealth Management Tools: A basic rule to follow is to confirm that your advisor is not only opening the right accounts for you but also using them correctly.
- Maximising Benefits: Your advisor can also help you with your required minimum distribution — which accounts to take money from first and how much to take each year.
- Philanthropic Planning: Your advisor can help you look at using appreciating assets for charitable giving. This strategy saves paying capital gains taxes and allows you to give more generously.
- Your Home and Insurance: Wealth managers can help each client determine their investment in their house, when and how to pay off the mortgage and when and under what terms you may want to refinance. At the same time they are reviewing all of your insurance needs from life insurance to income protection.
All of these steps should map to your life goals and how you are going to achieve them. It’s about aligning your money and your values so that you are actively working toward the life you have and want in retirement.
To think this way you need to pick the right wealth management partner; someone with whom you feel comfortable in reviewing your personal life plans.
OBT’s financial planning team empowers you to make the right decisions by providing smart, personal advice that explores options and delivers flexible strategies and plans for you.
We proactively communicate market changes, relevant opportunities and your progress, giving you the confidence to continue making sound financial decisions. With OBT, you will know that there’s always someone by your side every step of the way. Call our friendly team on 07 5462 2277 to organise your wealth planning strategy with us.