Wealth management begins with one basic thing: a goal. Perhaps it is an early retirement or building the financial security to launch a business. Maybe it’s funding your children’s college education or accumulating a solid estate that can benefit both your family and charities. Whatever the goal may be, when you begin, as is the case with most things you begin in life, you begin by looking up at a very tall mountain.
However, as any skilled mountain climber will tell you, reaching the top is attainable. It just takes preparation, discipline, skill and a respectful understanding of managing risks to do it.
BEGIN WITH SECURE FOOTING
As is the case with mountain climbing, creating wealth requires a strong foundation from which to builda foundation comprised of a clear goal, a strategic plan and a disciplined approach. Unfortunately, each of these things requires a commitment of time and vast knowledge of a complicated industry that most people do not possess. This is where professional investment management comes into play.
Investment management firms specialize in individual, corporate and institutional portfolio allocation. Whether the firm is a private bank, trust, private subsidiary of a bank, insurance firm, brokerage or other wealth management institution, their commitment is to both preserve and grow your estate. So while this is good for you, it also means that the selection process becomes a little more important, because different firms have different views on how best to accomplish this.
SELECT THE RIGHT PARTNER
Investment management may not be as life and death as mountain climbing, but the ramifications of picking the wrong advisor can, in metaphorical terms, be just as fatal. Therefore you want to work with a firm that you can trust, with people who will take the time to listen to and understand your unique needs and an advisor who will work with you to customize an approach that will allow you to realize your dreams.
Other important things you should consider when looking at a firm is its:
Track record How long has the company been operating and what is its reputation? This includes performance history; overall experience and credentials of its advisors; and, of course, a commitment to ethical business practices.
Accessibility ` Can you reach your investment manager when you need to? Referrals can be a good source of accurate information about a firm’s practices. Location is also important, because if your investment manager is local they are more likely to be accessible.
Management structure ` Are there local decision makers? This is important because it demonstrates a commitment to not only a region but to understanding the unique circumstances of a firm’s clientele within a specific region.
Research practices ` Don’t be afraid to ask a firm how it conducts, or obtains, research on the markets. Strong research tends to equal high-performing portfolios, and firms that conduct their own research often have greater accountability to both their clients and advisors.
MANAGE YOUR RISKS
AND KEEP YOUR OPTIONS OPEN
Just as important as where you want to go tomorrow is analyzing where you are today. Does your current strategy align with your current income levels and long-term plans? If not, then adjust your plan. This is where flexibility and customization becomes invaluable in your relationship with an investment management firm, because your plan should not be dictated by your age, marital status or income level but rather a plan that is shaped by your investment objectives, risk characteristics, pricing limitations and/or any other preferences you may have.
Another characteristic of control and customization is the range of financial products offered. Your investment management firm should be able to offer solutions with a wide range of asset classes, from money market accounts to bonds, real estate, foreign investments, and mid-cap and small-cap stocks that can target for growth, blend and value investment philosophies. This is important because asset perfor-mance can vary from year to year, making performance hard to predict.
ENJOY THE VIEW
When it comes to wealth management, the old clichE, `every accomplishment starts with the decision to try,` holds true. It is not easy work to think long-term, especially when your ultimate goals may seem as insurmountable as Mount Everest.
However, for those who understand that the future is never quite as far away as it seems and the mountain of financial independence only grows taller and more imposing as time passes, trying is not so difficult. Especially because it is a climb you do not have to take alone. In fact, the better your company and the stronger your commitment to keep climbing is, the quicker your ascent will be. And the view from the top, as most who have made it can tell you, is fantastic.
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