How a True Wealth Manager Views Your Life

Hey, guys! Justin with Financially Simple here to help you understand how a wealth manager views your financial life. Most people think a wealth manager is just someone who invests money, but that’s not really the case if they are a setting up a comprehensive plan. Investing money is just one aspect of what we do.

For example, think of your life as a box. Everything in the box is something you can control. We can either google to learn more, ask friends and family for advice or even hire professionals to help us build the custom life we want to have. Those areas are cash flow, risk management, investments, and distribution.

What You Can Control

Cash flow is how much money do we make and how do we make it. So few people know exactly where their money is spent. It happens far too often. This is why I stress budgets. They’re important for both the home and business.

Risk Management is everything that has the word insurance on it and the legal documents we use to protect it. Many people don’t plan their insurance packages, rather they buy it on a reactionary basis. When it comes to legal documents, that’s where a planner can be extremely helpful. You can google and research trying to find all that on your own as well.

Investments are next, and I like to break these up into four different categories. The first being qualified money. These are IRAs. SEPs, SIMPLEs, 401k’s, 403b’s, basically any money the IRS deems appropriate for qualifying events. The next is non-qualified money. This the money you have in savings, checking, cash on hand, mutual funds, stocks, etc. The third is real estate. I personally believe real estate is one of the best avenues to build wealth. Why? Because we can utilize someone else’s money and lessen the money coming out of our own pocket to build wealth. Business interest is my absolute favorite and will often add value to your wealth more than anything else. Why? Because we can use the tax code power to our advantage and build great net worth. Sometimes your business value can be substantially greater than any other liquid assets.

Ultimately the first three are leading up to the fourth, which is distribution. At some point, you will turn to all these assets to distribute them for something. Perhaps a new house, retirement, your children or grandchildren, whether it is, you are growing all these others to distribute it for ourselves.

What You Cannot Control

Now to look at what we can’t control. There are more than these four, but for today’s illustration, I’m going to give you these four. These are the reasons I implore you to hire a planner. The first being taxes. When Congress or the IRS throws a tax curveball at you, your planner will be able to shuffle all these to your advantage.

Next, we will all face inflation. That’s the increased price we pay for goods and services. A gallon of gas was a gallon of gas 20 years ago, but we pay more for it today than we did then. Inflation will cause an effect on your overall financial plan, and you need to know how to deal with that.

Thirdly is the return on investments or ROI. That’s where you look at what you’re investing in, whether it’s a good or service and how it appreciates to your benefit. You may have a home you’ve paid for but you’ve neglected all the other assets, and now you’re relying solely on social security for income. And that’s likely not good enough.

Lastly, is time horizon. This is how much time do you have before life happens. I hope to reach 60-65 and retire, but I may not. That’s where insurance and legal documents come into play. I may live longer than I plan for.

These areas all together are how a true wealth manager views your life. They see the big picture to your overall goal.

Are you building your own support team? Do you need help filling out your All-Star lineup? Contact us! The team at Financially Simple is ready to help.