Managing Wealth Isn't Exclusive to the Rich Anymore
Managing a growing fortune can be a daunting task for young professionals earning significant income. With the complexity of decisions surrounding stock options, real estate, and other financial situations, the services of a wealth manager can provide invaluable assistance.
Wealth managers offer a wealth of value, particularly to emerging affluent individuals. They can help navigate the intricacies of financial planning, ensuring that decisions are made with a long-term perspective in mind.
However, it's important to be wary of sales pitches that promise comprehensive financial planning but never deliver. Instead, focus on finding a wealth manager who is knowledgeable, qualified, and aligned with your specific needs.
The CFP Board maintains a database where you can look up Certified Financial Planners (CFPs) in your area. Recognized professional certifications such as Chartered Financial Analyst (CFA), Certified Financial Planner (CFP), or Chartered Financial Consultant (ChFC) are key qualifications to look for. Relevant experience, often several years in wealth management or related banking roles, and licenses related to securities and fiduciary responsibilities, like those from FINRA or SIPC, are also crucial.
When choosing a wealth manager, it's essential to consider the level and breadth of service provided, the range of financial products and services available, the firm’s financial strength, staff continuity, and client recommendations or referrals. A wealth manager should demonstrate both technical expertise in analyzing and forecasting financial scenarios and strong communication and interpersonal skills.
The key services offered by wealth managers typically encompass comprehensive financial planning, including investment management, retirement planning, tax strategies, estate and inheritance planning, risk management, and wealth preservation. They often coordinate with other professionals (accountants, attorneys) to provide an integrated approach that aligns with the client’s holistic financial goals.
A client in her early 30s, who held incentive stock options in a private company for years, was unaware of the three-year holding period required for optimal income tax treatment, the potential for alternative minimum tax upon exercising the options, and that her option documents stated she would lose tax advantages if she left her employer. Shortly after meeting with a wealth manager, the client began exercising her possibilities to start the clock on exiting her position, saving her from significant financial missteps.
Younger generations increasingly recognize the value of trusted wealth managers for their growing nest eggs. When selecting a wealth manager, it's important to understand their ongoing planning process, ask about their compensation structure, and inquire about any potential conflicts of interest. Many people, even those with modest investable assets, can benefit from the services of a wealth manager.
In summary, focus on certified credentials (CFP, CFA, ChFC), experience with affluent client portfolios, a comprehensive and customized service offering, and strong reputational indicators such as client references and firm stability when selecting a wealth manager.
A wealth manager, with their expertise in finance and wealth management, can assist individuals in making informed decisions regarding personal-finance matters and investing, enabling wealth preservation and growth. For instance, a younger client could have avoided potential financial missteps related to stock options had she consulted a knowledgeable wealth manager. As a result, it's essential to seek out wealth managers who possess recognized professional certifications, like CFP, CFA, or ChFC, and have relevant experience in managing affluent client portfolios, to ensure thorough liquidity and long-term planning for one's personal finance.
