Who should investors turn to for advice? Tim Bennett offers a short jargon-free tour of Investment Management and Wealth Planning.

What do Investment Managers and Wealth Planners do?

One of the challenges facing many people who are looking for advice, perhaps for the first time, is knowing who to turn to. In the saving and investment world, two job titles pop up pretty frequently – the Investment Manager and the Wealth Planner. Some firms offer just one of these services whereas others may offer both plus potentially other related ones too. So here is a quick tour of some of the similarities and also the important differences between these two roles.

The overall aim

Let’s start with what most people are aiming to achieve when they start saving and investing. No-one does this is a vacuum – the twin aims, which may differ in relative importance from one person to the next, are to live well and to leave a good legacy for future generations.

Since most of us lead busy lives, both services are designed to help those who are time-poor, knowledge-poor or who simply don’t want to have to worry about saving and investing day-to-day as they would rather focus on other things. Even those who have the time and the inclination to try to take a DIY approach may find that they “don’t know what they don’t know” when it comes to, say, portfolio construction and/or tax planning.

So, both services can remove a lot of hassle and worry. However, as with any marketplace, you need to be on the look-out for individuals and/or organisations that are not really interested in what you need, so much as selling you the product or solution with the highest commission for them. Recent changes to the regulations make this harder to do than it used to be – thank goodness – but some operators will always look for ways around such constraints.

Now to some of the things that differentiate investment management from wealth planning.

Language

Here is a snapshot of some of the ways in which the language differs between the two;

What this reveals is that Investment Managers tend to focus specifically on generating the best returns from a portfolio of investments (typically a mixture of share, bonds, funds and cash), whether managed inside a tax-wrapper, such as a pension (SIPP), or not. They may also offer advice on the way the portfolio is built and managed. Wealth Planners, on the other hand, take a wider, more holistic view of your financial assets and will aim to put together a plan that may encompass retirement goals, family protection (via the use of trusts for example) and estate planning. So, how can we sum up the overall objective of each service?

Since both Investment Managers and Wealth Planners are aiming to help people over the long-term, once an initial portfolio, or plan, has been constructed, you can expect to be in contact on a regular basis. This is especially true on the Wealth Planning side, where your changing circumstances will influence the type of advice you may need over time.

Part of the objective In both cases is to take away some of the stress and anxiety that can come with managing money as follows;

What can go wrong?

Deciding on the right person or firm to help with these challenges is ultimately a matter of personal preference. Bear in mind that very small firms may not have the range of expertise that you need but equally very large ones may not have the flexibility to deal with individual cases without imposing a one-size-fits-all solution. Ultimately the relationship you establish with the person who may become your adviser is vital – key questions include; do you like them, do you trust them and can you imagine yourself in regular contact with them? Finally, there is the all- important age and experience trade-off. You want someone who is young enough to still be enthusiastic but experienced enough to be able to offer a full range of solutions and be able to advise you in tough, as well as good, times. Pick the right person or firm and hopefully they will become a trusted adviser for life.