The underlying objective to the broad and somewhat intimidating question, ”What is Wealth Management?’, can be captured simply by asking yourself what does it mean to live a good life and to leave a good legacy.
More specifically it can be broken down into four key areas, each of which has its own challenges and rewards.
This is the key process of deciding what our major life goals are and then building a financial plan around meeting and funding them. Once we have set up an emergency fund as a matter of priority and decided how we will aim to fund life after work, what falls in the middle is personal to us in terms of the amounts involved and the timing. Major goals may include funding a break from work, buying a first or second home and paying for the education of children.
Once we have identified our key life goals, we need to build the capital that will pay for them. There are various ways we can boost our chances, for example maximising the power of each invested pound through compounding and making full use of tax-effective savings wrappers such as Individual Savings Accounts (ISAs) and Self-Invested Personal Pensions (SIPPs).
Successful wealth management involves constantly realigning our investing strategy and asset allocation to take account of changing circumstances and requirements. It is also crucial to strike the right balance between our income, capital preservation and capital growth objectives.
In order to leave a secure legacy we need to be sure that we have looked after our own retirement and long-term care needs first and then make sure we are passing on our assets in a safe, timely and tax-effective manner.