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What is Wealth Management?

One of the challenges in the financial services industry is the many different names that advisors use to describe what they do. (Another major issues is the confusing array of initials advisors use to convey their supposed expertise, but that’s a topic for another day!). Various advisors describe what they do as financial planning, financial management, financial advisory services, investing, investment management, portfolio management, and wealth management. “Wealth management” was first used as early as 1933 to describe a variety of services provided to wealthy families including investing, estate planning, tax planning, and personal insurance.

I’d like to suggest that we all need to think of managing our wealth as an important job. After all, people with modest incomes and relatively small portfolios consisting of one or two IRAs and a couple of employer sponsored savings plans like a 401(k) and 403(b) plan have to pay taxes, think about what happens if they die, buy auto/home/life insurance, take out a mortgage and how much to save for retirement and pay for college.

So the next time you’re thinking about your personal finances, think of yourself as your own “wealth manager.” It might change your mind set about how all your financial issues are linked together and the importance of managing them together to create the financial freedom you desire. That is what wealth management is all about.