The Wealth Management Experience

Introduction [Excerpt]
Wealth Management: A Superior Approach to Managing Your Financial Life

If you are like most investors, you have a long list of concerns about your finances. As someone with substantial assets, you have decisions to make—from how to invest your wealth, to how to minimize taxes, to how to ensure that your heirs and other important people in your life will be well taken care of. You might be seeking to protect your wealth from being taken from you unjustly. And there’s the increasingly important goal of leaving a legacy by supporting causes and charities that are meaningful to you.
I know all too well that the many tasks involved in successfully managing wealth often leave investors feeling uncertain about their decisions. There’s a nagging feeling that you could be making better ones, but you don’t know quite how to go about it. Some investors feel almost paralyzed when they first come to our firm—unable to make any decisions about their money for fear of making a bad one that will put their financial future in jeopardy.
There is good news: A process exists that enables you to organize your entire financial life so that you know exactly what needs to be done, why it needs to be done, and how to make it happen. It is a process that replaces confusion with clarity and gets you heading in the right direction. It is a process that empowers you with the confidence that all the “moving parts” of your finances are working in concert.
This process is called wealth management, and it’s what this book is all about.

Wealth management defined

You’ve probably heard the term “wealth management” before. Lots of advisors use the term to describe what they do. But as you will see, saying you do wealth management can be very different from actually doing it.
Let’s look at what, exactly, constitutes the best practices of wealth management, rightly understood. Like many people, you might think it’s chiefly about the performance of your investments and how well you’re doing compared to “the market” or your peers. But while investing is certainly a component, it is only one facet of a much broader process.
At Hatton Consulting, wealth management is a well-defined process designed to solve affluent investors’ full range of challenges and coordinate all the aspects of their wealth that they must arrange in order to build meaningful lives.
There are three main components, as we practice it:

1. Investment consulting aims to position your assets around your goals, return objectives, time horizons, and risk tolerance. This is the foundation upon which a comprehensive wealth management solution is created.

2. Advanced planning means going beyond investments to address five additional areas: tax planning, estate planning, insurance planning, asset protection, and charitable giving. Advanced planning involves going the extra mile, harmonizing investment decisions with your other areas of concern—ensuring that all aspects of your financial life work together seamlessly. It’s a sophisticated approach that ends up simplifying your life.

3. Relationship management involves understanding your needs and meeting them through a consultative process, assembling a network of financial experts, and working with other advisors you may have, such as attorneys and accountants.

The benefits

The majority of investors today, even those who have professional financial advisors, do not take a wealth management-based approach. A study by CEG Worldwide found that a mere 6.6% of financial advisors practice the kind of wealth management we are talking about—even though many more advisors call themselves wealth managers.
For most of these professionals, the focus is on investments—picking stocks, funds, exchange-traded funds (ETFs), and other investment products. That outlook, by itself, fails to take into account other huge drivers of investors’ ultimate ability to achieve their goals—including their exposure or potential exposure to income taxes and estate taxes, as well as their ability to protect the wealth they have built over time. By stopping short of connecting all aspects of your financial life in a holistic way, you needlessly put at risk your future and the futures of those you care about most.
Based on my experience bringing full-fledged wealth management to my clients, I have seen four key advantages coming out of this comprehensive process:

1. Coordination. All aspects of your financial life work in concert. This mitigates the risk of having one decision unexpectedly impact another part of your finances negatively. It also enables you to take advantages of opportunities that can only be identified using a holistic approach. For example, combining income tax analysis with investment management can reduce other taxes beyond the ones on your investments.

2. Clarity. Wealth management, done thoroughly and well, gets you and your family organized so you can see exactly what you’ve got, how these different pieces are (or are not, in some cases) fitting together, and how they could be made to work harder on your behalf. The result: a sharper picture. You can make smarter, more confident decisions.

3. Policies for dealing with life events, both expected and unexpected. Wealth management can spell out what will occur with your finances if you become incapacitated or otherwise unable to make decisions—giving you the comfort of knowing that your family will not be forced to face avoidable dilemmas during trying times and that their well-being is assured.

4. Peace of mind. Wealth management brings you a level of calm about your future that you may never have experienced. The serenity that comes from knowing you have a process in place that is working to improve your situation means that you can enjoy a largely worry-free life in retirement, focused on the things you want to accomplish. . .