A Tale of Two Advisors

Two of the most common terms you hear are Private Wealth Manager and Financial Planner. Both are considered financial advisors in the broader sense – with similarities and differences.

 

Financial Planner

A Financial Planner is someone who assists with lifestyle planning and helps clients achieve certain goals.  This includes budgeting, cash flow analysis, saving for college, retirement, and ultimately wealth transfer.  Financial Planners may specialize in a number of topics that are part of the financial planning spectrum.  One planner may specialize in insurance while the other focuses on estate planning— regardless, we all serve the same purpose in helping our clients plan for their future.

For example, a couple came to see me recently and their number one priority was determining if they have enough money to retire.  As a financial planner, it was my job to sit down with them and do a holistic financial plan.  We have the tools and software that help us guide our clients through the life stages and assist them with their goals and objectives.  By taking a complete look at their financial picture, I was able to help them consider their seemingly single question from multiple angles based on how they envisioned their retirement:

  • Did they want to retire early?
  • Were they planning to retire at the same time?
  • Did they want to travel or anticipate other post retirement expenses?
  • Were they prepared for late-life medical needs?

 Additionally, in retirement planning, short-term questions can be just as important, if not more important, than longer-term questions. These could include:

  • What might tap into their financial resources now that could impact their ability to save for retirement? Education? Vacation home?
  • How can we maximize savings and minimize taxes for the short-term to have the most to invest for the long-term?

A financial planner guides clients through considering all aspects of their financial picture – not just the pressing ones.

 

Wealth Manager

A Private Wealth Manager is another type of Financial advisor who simply manages your wealth.  They monitor your investment accounts and overall investment portfolio, likely to an investment benchmark, and your overall asset allocation, adjusting your portfolio over time based on market conditions. Wealth Managers typically work with high net worth individuals, corporations, foundations, endowments and charities, considering short- and long-term cash flow needs. A Wealth Manager considers if your investment portfolio is appropriate based on your overall risk tolerance and time horizon. A Wealth Manager will ask you questions such as:

  • Are you comfortable with fluctuations in the value of your investment portfolio?
  • How often do you look at the value of your account?
  • Do you need your investment account for income or are you strictly looking to grow the size of the account?

A wealth manager guides clients through considering what types of investments are appropriate for them.

 

Which Financial Advisor is Better for Me?

The answer to this question is “it depends,” as one is not better than the other.   In fact, depending on the type of financial firm you partner with for trusted advice, you may work with both.

For example, I was approached by a not-for-profit organization that had some excess funds to invest.  Their goal was for the excess funds to grow in value over time and they needed a wealth manager to assist them in designing an investment portfolio with targeting this objective. In my capacity as a wealth manager, I evaluated their Investment Policy Statement (IPS) and considered their short- and long-term cash flow needs to update their asset allocation to include these additional funds to invest. I did not need to consider taxes, insurances, funding sources, or other information considered in a financial plan for an entity.

Both professions require the similar skill sets and having a sincere understanding of the capital markets.  My advice to you would be investing your time to research, interview and hire a financial professional who can help guide them through these different approaches to financial planning|wealth management to determine the best approach for you.  As a trusted advisor you want to partner with someone you can build a relationship with over time, based on your needs.

 

William M. Coxe Jr., Private Client Advisor – In his role as a Private Client Advisor, William provides personalized client service to high net worth individuals, corporations, endowments, and foundations. He works one-on-one with his clients on financial and estate planning, asset allocation, and assisting his clients’ understanding of the capital markets.

The information contained within has been obtained from sources believed to be reliable but cannot be guaranteed for accuracy. The opinions expressed are subject to change from time to time and do not constitute a recommendation to purchase or sell any security nor to engage in any particular investment strategy. Investment Advisory Services are offered through Greenwood Capital Associates, LLC, an SEC-registered investment advisor.

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