how financial planning is different from wealth management
TRANSCRIPT
How financial planning is different from wealth management
WHAT IS WEALTH MANAGEMENT?As the name suggests, wealth management is all about managing one’s wealth. This predominantly deals with preservation of wealth and further accumulation. As part of wealth management, investors often actively try to identify and take advantage of profit-making opportunities.
DIFFERENCE BETWEEN FINANCIAL PLANNING AND WEALTH MANAGEMENT:Financial planning and wealth management are inherently very similar. Yet, there are some key differences. The biggest difference is that you already need to be wealthy to ‘manage’ your assets. Financial planning, on the other hand, is even for those who aim to amass wealth.Financial planning, thus, is required by everybody, whatever your financial goals may be.
Wealth Management Financial PlanningUndertaken by the wealthy Undertaken by everybody
Needs existing wealth Does not need existing wealth
Deals with preservation and increase in wealth
Deals with all things money
More active management Comparatively passive management
Let us look at when wealth management is required depending on the phase of your life.
EDUCATION PHASE:
This is the phase in which you gain knowledge and education about investment, but you may not have a lot of financial wealth. So, no wealth management is required. However, even at this time, you will have to do financial planning to make the best use of your money.
#1
ACCUMULATION PHASE:
This is the phase in which you start enacting your strategy and accumulating financial wealth. Here, wealth management may not be required at the start, but may be needed at later stages once a significant amount of assets are accumulated. Financial planning, however, is required even at this stage. Planning involves re-evaluating your strategy and changing it if required.
#2
RETIREMENT PHASE:
In this phase, if individuals have accumulated wealth already, then wealth managementis required. But, if they do not have large financial wealth, then it is not required.On the other hand, financial planning is still required with decisions relating to investment planning (where to invest money) and estate planning (how to transfer real estate assets).
#3
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