Why a Financial Plan is Essential to Wealth Management

“Wealth management” is a term commonly used in the financial services industry, but what does it really mean? How does it relate to a financial life plan? And more importantly, what does all of this mean in relation to you?

Defining Wealth Management

At face value, wealth management is relatively straightforward. It is an advisory service that serves to preserve and enhance an individual’s wealth through a variety of different financial planning services including, but not limited to, investment management, accounting, estate planning, retirement planning, risk management, and tax planning. The wealth manager, or advisor, employs his or her knowledge of these financial disciplines to provide advice that corresponds with their clients’ needs, available resources, and future goals.

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But, at the heart of it, wealth management extends far deeper than the surface definition. At the end of the day, "success" is defined not simply by numbers on a report, but by whether or not you feel you are on track toward accomplishing your life's goals. This is why proper wealth management is only achieved with a deep dive into one’s life plans.

Financial Life Planning

Wealth management is not a hodge-podge amalgamation of investments and canned financial advice. Wealth management requires a comprehensive approach, taking into account all aspects of an individual’s life—their values, their health, their interests, their loved ones, and even higher-level concepts such as their sense of self and what makes them feel they are living a life of purpose. The financial life plan aligns the dynamic and multi-faceted aspects of your life with financial plan that makes the most sense for managing and enhancing your wealth.

Your financial life plan serves as the guidebook on how your resources will fund the life that makes you feel successful. Individuals with a financial life plan in place tend to:

1. Maintain Standard of Living: When measurable financial goals are set, individuals are more apt to stick to proper budgeting, saving, and spending routines. The financial plan helps to keep individuals accountable and on track to fund the life they desire.
2. EnjoyPeaceofMind: Individuals whose assets, family, and livelihood are properly protected can rest easier each night knowing that unexpected life changes will not upend their financial wellness. This peace of mind comes from knowing the proper risk management policies are in place and your financial plan is being monitored by your advisor ongoing.
3. AvoidBeingSwayedbyMarketMovement: Endless research on investor behavior indicates that individual investors panic and make costly money moves when the market dips. In most cases, investors will respond by selling equities prematurely and re-buying at a higher price while also losing out on valuable time in the market. With a trusted advisor, investors have a safeguard to monitor their portfolio and keep unpredictable emotions in check.
4. FeelMoreFulfilled: Financial life planning is about focusing an individual’s resources on what matters to them, whether that’s managing a business, putting children or grandchildren through college, establishing a charitable plan, securing a comfortable retirement, or all of these combined. When an individual is on track to achieve these desires, they feel fulfilled. These successes bring purpose and a sense of accomplishment to their lives.
5. HaveMoreOptions: Life is ever-changing and unpredictable. Wouldn’t it be nice to be able to adapt to those changes without going into financial turmoil? A financial life plan is fluid and can be adapted as life evolves. In fact, financial life plans should be revisited annually or anytime a major life change occurs.

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While wealth management is the service your advisor provides, the financial life plan is what brings it all together. By coordinating the parts and whole of your financial life plan with the management of the dollars and emotions related to the wealth management service, your advisor can help you to fulfill your plans and achieve your ambitions.

At Northstar Financial Planning, we believe that there is so much more to managing wealth than what can be quantified on a page. Our mission is to empower you to make informed financial decisions about life's trade-offs by providing consistent personal service and unbiased expert advice. If you feel you could benefit from this type of life planning and wealth management, we encourage you to schedule a complimentary Get Acquainted call with us here. We look forward to meeting you.

Written by Julie Fortin in collaboration with Lexicon Content Development