Wealth managers do a lot more than select stocks and stare at screens like in the movie Wall Street. The right one can help you plan your entire financial life and people from all levels of wealth are realizing how much more relaxing life can be when they have a trusted professional looking out for their best interests and providing guidance that may not have occurred to them if left to their own devises.

The label of private wealth manager may come with preconceived notions floating through a person’s mind. Likely the most common notion is that all a wealth manager does is pick the best stocks, bonds, exchange-traded funds, mutual finds and the like for clients. To be fair — that is only the start of the job.

A healthy and holistic relationship with your wealth manager means:

1. Actively Creating Your Retirement Plan: Your wealth manager is actively involved in helping to strategize your retirement planning. This planning can involve a number of things, including updating and changing a client’s investment profile based on where they are in their life cycle, with older customers being moved into more stable investments.

2. Coordinating Across Disciplines: While asset allocation is an expected part of any financial planning role, your wealth manager can also connect clients with accountants and attorneys. They may also help with trust planning, insurance requirements and managing the client’s risk. For example, your advisor can work closely with any existing advisors you may have such as an estate attorney and CPA, to help ensure that ongoing coordination and execution of the customized wealth management strategy is understood by your larger team of advisors. Thus, allowing your strategy to function appropriately across all related areas including investment, tax, financial and estate planning.

3. Being Free to do What’s in Your Best Interest: Is your wealth manager independent? Many employees who work at large financial institutions (often referred to as wire houses) may not be inclined to entrench themselves in their client’s financial planning. Thus, knowing the difference between an independent advisor and an in-house advisor is key.

4. Knowing the Difference Between a Nest Egg and Long-Term Financial Stability: Clients often view a nest egg for retirement in the wrong way. It’s not an account to draw from before retirement, or chip away from once retirement is in place. The real necessity for people to understand is that their money needs to be working for them and producing income during retirement. Planning financial security follows the principles of wealth management regardless of how much money a client has. With the disappearance of pension plans, it’s even more relevant today for people of all income levels.

5. Annual Meetings: Monitoring your progress should be an annual event (at minimum) with your wealth manager. It might involve computing your net worth to determine if you are on track, falling behind or ahead of schedule. This meeting can also serve as a great time to review how to handle bonuses, inheritances and other windfalls. Surprisingly, many windfall recipients squander their money and/or dismiss the importance of proactively managing it and that includes factoring in the various tax implications. When this happens a onetime windfall can actually lead to impoverishment. The idea is they make you rich, which leads to overspending. Wealth is what you save not what you spend. ¹
   
6. Education on Your Safe Spending Rate: While few like limits on their spending, having your eyes wide open about the short-term and long-term impact is key. If you buy that second home you might not have the funds needed to retire and your wealth manager can help to map out the dos and don’ts for you and your family.

7. Access to Real Wealth Management Tools: A basic rule to follow is to confirm that your advisor is not only opening the right accounts for you but also using them correctly. There are multiple types of investment accounts ranging segregation accounts for Roth, Traditional and SEP to health savings accounts. A wealth manager can execute a Roth conversion and figure out how many assets to convert, how to keep the assets segregated into different accounts and monitor for when to recharacterize some of those investments or even undo part of or all of the conversion. Your advisor can also help make sure estate planning is in place and titling and beneficiary designations are correct. Plus your advisor can educate you on how using a Roth conversion can allow one to efficiently pass wealth systematically to the next generation.

8. Maximizing your Social Security Benefits: Your advisor can also help you with your IRA required minimum distribution — which accounts to take money from first and how much to take each year.

9. Philanthropic Planning: Your advisor can help you look at using appreciated assets for charitable giving. This strategy saves paying capital gains taxes and allows you to give more generously. They can also sell assets with significant losses so you can take the loss on your taxes.

10. Your Home and Your Insurance: Yes — wealth managers are in the trench with their clients and they can help each client determine their investment in their house, when and how to pay off the mortgage and when and under what terms you may want to refinance. At the same time they are reviewing all of your insurance needs from life insurance to umbrella coverage.

All of these steps should map to your life goals and how you are going to achieve them. It’s about aligning your money and your values so that you are actively working toward the life you have and want in retirement. To think this way you need to pick the right wealth management partner. Someone you feel comfortable with in reviewing your life plans. That person is your financial Sherpa and it should be a trusted and enjoyable journey.

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David Osborne is the founder of Osborne Advisors, an independent private wealth management firm offering wealth management to high net worth individuals, families, estates and corporations since 1999. An extension of Osborne Advisors, Osborne Advisors Pro, is a sports wealth management offering created solely to focus on the unique financial management needs of professional athletes and coaches.

This article was written and prepared by David Osborne in conjunction with Red Fan Communications. David Osborne is a registered representative and registered investment adviser representative of SWS Financial Services, Inc., a member of FINRA and SIPC and a registered broker dealer and registered investment adviser who does not provide tax or legal advice, located at 1201 Elm Street, Suite 3500, Dallas, TX 75270, 214.859.1800. Though information provided in this article was prepared by sources believed reliable, SWS Financial Services, Inc. does not guarantee its accuracy or its completeness. This article may not be duplicated or redistributed without the prior consent of SWS Financial Services, Inc. Red Fan Communications is unaffiliated with SWS Financial Services, Inc.

Sources:
1. DailyFinance, “Six Tips on How to Avoid Squandering Financial Windfall" by Lynette Khalfani-Cox