The Evolution of Wealth Management

The Traditional Approach:

What do you think when you hear the term “Wealth Management”? Most probably think of something like: Wall Street, the stock market, your company’s retirement plan, investment accounts – perhaps being so-called ‘rich’. And, if that’s what you thought you were right.

The Modern Approach:

Wealth management has evolved over the past two decades. Where it was once about strictly managing investments, it now revolves around financial planning for your life.

What is Financial Planning?

At its core, financial planning is defining goals and values you have and aligning your financial life around those values to accomplish the goals you set. In fact, here at Greenwood Capital, we say Financial Planning is Life Planning.

Financial planning is about building and protecting wealth to accomplish specific goals. While retirement tends to be the primary focus for most of clients, your financial life stretches much wider—especially the earlier you start your life/financial planning journey. Here are some typical scenarios we encounter when meeting with clients:

• Based on our financial picture can we, and how do we, pay for college or private school given our situation?
• My career is doing really well and I have some extra money but I am not sure what to do with it? Should I splurge a little, invest for retirement or education, buy life insurance, plan for a legacy – can you help?
• The value of my company owned stock has sky-rocketed. Can you guide me through to protecting my restricted stock units while capitalizing on this growth without incurring substantial taxes?

The point being, everyone’s situation is different and that’s what makes personal finance – personal.

We believe the days of sitting down with a broker to discuss individual stocks are gone in terms of modern wealth management. Instead, we recommend conversations that revolve around your aspirations and values.

A Real-Life Example:

Let’s take a look at a realtor (Sherry) who has a competitive advantage investing in private real estate markets. She has amassed a reasonable real estate investment portfolio.  She also has a 401(k) plan with her company, and an Individual Retirement Account (IRA). Historically, a traditional wealth management approach would focus on the stocks and bonds inside the 401(k) and IRA plans. Modern wealth management incorporates all her assets and liabilities into a comprehensive financial plan based on her short-term goals (kids’ education), and long-term goals (traveling and planning for wealth transfer and a charitable legacy.

In this modern approach, we recommended outside counsel on real estate decisions to determine how it would affect Sherry’s overall financial plan and ability to accomplish her goals. We looked beyond the traditional investments and helped Sherry navigate the complexities of inflation, depreciation, recapture taxes, 1031 exchanges, etc. in the short-term and long-term.





Who Needs a Financial Planner?Not everyone needs a professional financial planner. In fact, if you spend significantly less than you make, invest early and often in good investments, and stay invested, the average person will end up in a solid financial position later in life. However, life gets crazy and complex situations to arise. That’s where an advisor’s expertise comes into play.

A Vanguard study¹ found having a financial planner adds 3% in annual returns vs. doing it yourself. Here are a few red flags that may indicate you need a financial planner.

• Do you find yourself worrying about your investment accounts at night?
• Do you have kids you want to put through college and don’t know where to start?
• Do you want to minimize your taxes when saving for retirement and use the most efficient way possible to withdraw those funds?
• Are you a business owner and need a CFO for your finances?
• Do you have significant wealth concentrated in a few assets such as a business?
• Do you struggle to control spending or need to know how much you need to save?
• Do you have dreams that require substantial financial capital to achieve and need guidance?
• Is your spouse uninvolved in the finances and do you want them to be secure after you leave?
• Do you want all of your financial assets, such as employer benefits, personal savings, retirement accounts, and personal real estate, to work in tandem to accomplish your financial goals?

A modern CERTIFIED FINANCIAL PLANNER^TM helps clients decide the amount of capital to put at risk, when to put it at risk, and how to put it at risk in the most efficient manner possible. Because we seek to know every detail of your financial life intimately, and understand how to coordinate everything to optimize your balance sheet, our goal is to remove that stress from your daily life.

¹ Putting a value on your value: Quantifying Vanguard Advisor’s Alpha..Kinniry, Francis; Jaconetti, Colleen; DiJoseph, Michael; Xilbering, Yan; Bennyhoff, Donald

Quintin A. Pile, CERTIFIED FINANCIAL PLANNER^TM Private Client Advisor – In his role as a Private Client Advisor, Quintin 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.