Many people have similar financial goals. These may include paying off debt, building up an emergency fund, and saving for retirement. And while these goals may put you in the driver’s seat for financial control, they are only the first steps in financial independence.
Financial independence is much more than being debt-free and contributing to retirement. It also includes leveraging your assets and continuing to build wealth for future generations.
You may have heard the terms “wealth management” and “asset management.” But what are the differences between wealth management and asset management? And how can you get the right financial guidance?
Asset management is exactly as it sounds: managing your assets. More specifically, asset management typically focuses on your investments. These may include mutual funds, stocks, bonds, and EFTs.
Most people do not have the financial knowledge to make the most informed decisions when it comes to asset management. A financial advisor can help to guide you based on your individual financial situation. Advice may include asset allocation and how to diversity your assets.
Wealth management takes asset management a step further. This broader view looks at how to build wealth, usually with the intent of protecting wealth down the line.
A wealth manager will offer additional services. These may include estate planning, education planning, tax planning, insurance, and charitable giving. A wealth manager will focus on improving the overall financial position of a client.
Wealth Management vs Asset Management: Which One Is Right for You?
If you are new to financial planning, you may want to start with asset management. Investments can often be confusing, and it is a good idea to have a handle on how to maximize your portfolio.
However, ultimately you will benefit the most from the advice of wealth managers. A wealth manager can ensure that your entire financial picture is in line with your goals.
Wealth managers can also identify where you need to place additional focus. For example, if charitable giving is important to you, you will want your estate planning to reflect this. Or, you may want to understand the best options for saving for your children’s education.
Reviewing Your Financial Situation
The end of the year is an excellent time to review your finances. You can look at how your assets performed over the year and make adjustments for the next year.
Year-end financial planning also includes reviewing charitable contributions and tax advantages. A financial planner can help you leverage these opportunities.
Planning for Your Financial Future
Financial security extends beyond your immediate financial situation. It involves looking into the future and planning accordingly. As you look at wealth management and asset management, consider your overall financial goals.
If you don’t know where to start, contact a financial planner for a consultation. Financial planners are experts in guiding their clients.