Wealth management for business owners
January 1, 2013
An interview with National Director of Financial Planning (NDFP), Wells Fargo Private Client Services
Q: What is wealth management and how does it differ from investment management?
A: Investment management is the process of managing financial assets like stocks, bonds, cash and mutual funds in order to achieve a specific goal like retirement or college funding. Wealth management expands the focus considerably by looking at virtually everything that impacts an individual's net worth: a privatelyheld business, personal residence, vacation property, insurance, loans, taxes, the needs of beneficiaries and so on.
"A good wealth manager saves the client time and helps the client address those issues that create the most value."
Q: When business owners consider this total networth package, is there a particular area they tend to overlook or neglect?
A: Business owners seldom pay enough attention to estate planning because it's difficult and, to a certain extent, it's unpleasant. They also tend to forget that retirement benefits and life insurance policies should be treated as part of an overall estate. If these assets are managed improperly or ignored, the IRS will gladly pay attention to them.
Q: What's the most common mistake business owners make when it comes to managing personal wealth?
A: Neglect. They simply don't have the time to handle the tremendous number of details wealth management requires. If you're already working 80hour weeks, how much time can you can spend considering how assets are titled, or whether there are methods of shifting tax burdens to family members in lower brackets, or whether there's too much risk in an investment portfolio?
Q: Since most business owners already have relationships with professionals such as tax advisors, lawyers and bankers, why do they need wealth managers? ...
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