Asset and Wealth Management: Financial Planning & Investment Advice for Creative Entrepreneurs

Definition of Asset and Wealth Management

These are no clear definitions for asset and wealth management, just some generally agreed upon ideas.  Asset management generally describes the management of investment assets to grow them, while wealth management usually includes a more broad range of services such as tax strategies.

These services are provided by a range of financial professionals that may describe themselves as financial advisor, investment advisors, insurance agents, CPAs, asset management firms or wealth management firms.

There are key differences in the qualifications of these professionals and the type of service that the offer.  Before you engage a professional, make sure you understand your needs and the best fit for them.

Types of Asset and Wealth Management Services

Because there is no standard definition of the term, services vary widely by provider.  Here are the most common services offered by financial professionals.

Investment Management

This can also be called Asset Management, but means the same thing.  This service manages your investment portfolio with the intent of growing your assets over time based upon your risk tolerance and specific situation.  The investment advisor will start with a risk-return analysis of your existing investment portfolio.

Based upon your situation they will recommend a diversified portfolio focusing on risk management strategies.  This portfolio will likely include mutual funds, but could also include individual securities.  It is important that your portfolio include all markets, including Non-US to ensure proper diversification.

Fees for most asset managers is based upon a percentage of assets under management.  Most asset managers are going to restrict themselves to registered securities.  Some managers, such as those trust services will manage other types of assets such as real estate or mineral interests.  Fees for Trust Management are generally higher than those that just manage registered securities.

Tax Planning

Tax planning services provided by most tax preparers do not focus tax optimization of investments.  Often there is a gap between those that provide investment services and those that provide tax services.  Finding a company that can do both is best.

Careful tax planning is necessary regarding your investments to ensure no unintended consequences.  One example of this is the wash-sale rule and capital gains tax.  Proper tax planning will have a definite impact on your overall return performance over time.

Estate Planning

Estate planning is usually the purview of attorneys, although some wealth management firms will employee lawyers to provide this service.  Basic estate planning includes wills, trusts, probate planning, medical directives, and durable powers of attorney.

Advanced estate plans will focus on legacy planning, the inter-generational transfer of wealth.  It will use various methods to reduce or eliminate the effect of the federal and state gift and estates taxes.

Retirement Planning

Asset management does not necessarily include planning, such as for retirement.  Proper planning can include not only planning for retirement but education planning and succession plans for business owners.  Most financial planners either provide the plan as part of their fees for managing your assets.  Others don't provide asset management services, and only do the planning, usually for a flat fee.

Who is a Good Fit for Asset and Wealth Management?

High-Net-Worth Individuals

Individuals with less than $250,000 in investment assets (excluding your residence and other personal assets) may be best served with a retail brokerage like Schwab or Fidelity.  They have many online resources, but don't expect much service.  You will generally pay for there service with brokerage fees.

Individuals with more than $250,000 can a wealth manager such as a registered investment advisor.  Most of these firms have asset minimums in order to engage them.

Business Owners & Professionals

Business owners need to work with a multitude of professionals including CPA's, attorneys, and wealth managers.  If your business needs are large enough, there are companies that provide all services combined in house.

One of the unique challenges business owners face is how the business funds your overall financial goals.  Will the business be sold to fund retirement?  If so, what are the tax consequences of the sale?  How do you value the business?  All of these issues make financial planning for business owners complex, regardless of the size of the business.

At Core, we provide both tax planning and preparation, as well as wealth management services.

Families with Complex Financial Goals

Families with complex financial goals should work with a financial planner, regardless of whether they engage a wealth manager.  Examples include blended families or families with children with disabilities.  Asset managers are not usually focused on the overall financial life and impact of the investments.

Expect to engage an independent financial planner to review your objectives and needs, and then engage a wealth manager to implement the plan.

Conclusion

In conclusion, creative entrepreneurs have unique financial needs and challenges, but with the right asset and wealth management strategies, they can secure their financial future while pursuing their passions. By seeking out expert financial planning and investment advice, creative entrepreneurs can turn their artistry into a profitable and sustainable business. Remember, your creativity shouldn't be hindered by financial worries; let your financial planning be the foundation for your artistic success!