What Makes a Good Wealth Management Strategy?

When you think about wealth management, investing is often the first thought that comes to mind. While investing is an important piece of any wealth management strategy, it’s just that: a piece. There are many other considerations in addition to investing that should be included in a wealth management strategy.  

Below is a look at the key components of a good wealth management strategy, as well as differentiators between a good strategy and something that’s more one-dimensional.  

What's included in wealth management?

Wealth management starts with financial planning but continues deeper into more complex strategies and considerations that emerge once you amass a certain level of wealth.  

For example, both financial planning and wealth management include advice regarding the following: 

• Budgeting or setting financial priorities 

• Setting aside money for emergencies and opportunities 

• Investing for various financial goals, including retirement 

• Protecting your wealth and family with insurance (health, life, disability, home, auto and business) 

• Creating an estate plan that ensures your final wishes are carried out 

Once your net worth reaches a certain level, additional wealth management services will typically include: 

• Advanced investment management and advice, 

• Tax planning and management, 

• Advanced estate planning, 

• Gifting strategies, and 

• Guidance around more complex compensation plans. 

What are the elements of a good wealth management strategy? 

Simply put, the best wealth management strategies are multi-dimensional. It’s not just about growing your wealth, it’s also about protecting it and utilizing it in a way that’s fulfilling. It's about being tax efficient. The strategy should look across your financial life and bring the disparate pieces together to manage assets efficiently and free you up to pursue your life goals. The result is a plan that’s more efficient overall.  

Of course, wealth management includes a robust investment strategy that employs diversification, tax-loss harvesting and consistent rebalancing. But it would also consider how the stable cash value of a whole life insurance policy can impact the amount of risk you might take with your investments. Because cash value provides stability for your plan, it may allow you to take more risk with your investments. Ultimately, this kind of approach can lead to a greater return over time than you may have achieved by looking at investments and insurance in isolation rather than the ways they complement each other.  

In retirement, a wealth management strategy might also add an annuity to income expected from Social Security to additional provide stable income that’s not affected by the markets and will last for as long as you live. Your strategy would also look at the timing of filing for Social Security as well as how to make strategic withdrawals from different qualified and non-qualified accounts. The combination of all these different pieces helps to prepare you for good times — but also for times that may not be so good. 

The right wealth management strategy optimizes your plan

Wealth management isn’t just about reaching your goals. It’s about making sure you’re positioning your assets correctly and being tax efficient and that the pieces of your financial life are coordinated. 

Your strategy should be built to grow and change with you over time — in the good times and bad. A financial advisor can get to know your personal situation and show you how wealth management can help you achieve your goals.