The Benefits of a Wealth Management Relationship – Part 1, Ep #198

When reaching out to a financial advisor, people are looking how to save more, invest better or reduce taxes. While a financial plan can be a great start in answering these questions, there are limitations to creating a one-time financial plan.

In this episode, a few of our wealth advisors break down how wealth management works from the tax planning, retirement planning and risk planning perspectives.

What is Wealth Management?

Many are aware of the wealth management terminology, but it can be tough to understand the distinctions between a one-time financial plan and a wealth management relationship and how it could benefit you.

People tend to contact a financial advisor with a pressing financial question that creates uncertainty about their financial future. They may simply want to know if they can retire without running out of money. Or perhaps they are looking to see if they’re invested appropriately. Others are interested in saving more on taxes.

While a one-time financial plan can give you a status check, it can fall short of helping with the accountability and implementation that most people are looking for when managing their finances.

To effectively manage, implement, and monitor your finances takes ongoing time, knowledge, and attention. This accountability could be the difference in reaching your goals or not. Too often, people put off asking themselves what the risks could be if they do a poor job managing their own financial picture.

The Benefits of the Wealth Management Relationship

Clients can save time and achieve more consistent implementation of their financial plan through a wealth management relationship.

One of the primary reasons people seek financial advice is to understand all the possible tax-saving opportunities available to them. A wealth manager can help you to maximize your tax-saving opportunities by fully funding tax-deferred retirement accounts, and using Roth conversions when appropriate.

Too often we’ll see that people reaching out to us have both already taken their Social Security early. But it’s important to understand all your options with Social Security claiming strategies and how delaying could benefit you. Particularly if you are married, could delaying the higher spouse’s social security income provide more security if that spouse passed early? You’ll also want to consider how IRMAA could impact your medicare premiums.

Having an annual practice of creating a tax plan can help you understand the most beneficial tax moves for your situation. When working with a wealth advisor, they’ll help you build an annual tax projection to evaluate your long-term picture to help you lower your lifetime tax rate.

What Risks Are You Planning For?

Often it’s risks that motivate us to reevaluate our financial planning. Not understanding if we have taken the necessary steps to either transfer or mitigate major financial impact events can be unsettling.

This is where a regular review of the large risks coupled with scenario planning can provide peace of mind that you’ve considered how you could be impacted. Even outside of life insurance alone, other areas where risks haven’t been addressed can cause anxiety. Questions like:

  • Will I be ok if I become disabled?
  • What if I’m laid off before my planned retirement?
  • Will I run out of money if a large long-term care event occurs in our lives?
  • Am I invested too conservatively or too aggressively? [We will touch on this in part 2]

Developing a risk management plan within the context of your dynamic financial plan can leave you feeling better prepared to face the inevitable curveballs that life will throw at you along your financial journey.

A fiduciary financial advisor will put your interest first and analyze your finances with a fine-toothed comb to look for tax-saving opportunities, ways to maximize your retirement planning and assess your risk management plan.

Outline of This Episode

  • [1:34] Tax planning benefits that wealth management can help with
  • [7:55] Utilizing the mega backdoor Roth
  • [11:05] Using a brokerage account to improve retirement flexibility
  • [18:30] Maximizing Social Security
  • [22:54] When life events change financial plans
  • [25:50] Handling risk management
  • [29:58] Preparing for non-insurance risks

Resources & People Mentioned

  • Episode 148 – Developing a Retirement Withdrawal Strategy
  • Episode 178 – 10 Tax Planning Opportunities You Don’t Want to Miss

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