Post by 360 Financial, Wealth Management and Big Picture Planning in MN
Wealth Management for High-Income Earners
Most high earners start their careers looking to achieve financial stability while also enjoying the work they do every day.
If you've achieved professional success, then you're probably already financially stable. And yet, you may not be fully prepared for retirement or a work-optional lifestyle.
If you earn a generous income but aren't working with a wealth management firm, this post will help. We cover some reasons why it may be time to start seeking comprehensive financial advice from a wealth manager.
Wealth management services are typically suitable for anyone with $1M or more investable assets. In other words, you don't need to be a billionaire or even a multi-millionaire to benefit from the services of a holistic wealth management firm.
But first, what is wealth management?
What Is Wealth Management?
Wealth management allows high-net-worth individuals and business owners to optimize how their assets are managed and plan for the future.
Wealth management firms seek to ensure the best possible outcomes for their clients by providing guidance on investment management, risk management, estate planning, retirement planning, tax planning, and succession planning.
Unlike financial planning, which typically focuses on short-term goals, wealth management focuses on accumulating, preserving, and transferring your wealth over time.
A holistic wealth management firm will look at your big picture and aim to ensure every piece of your financial puzzle has been considered and optimized so you're not worrying about the future.
8 Benefits of Wealth Management for High-Income Earners
1. Dedicated Guidance
When dealing with a high income, various assets, and a complex investment portfolio, it can be tricky to figure out how to approach your next decision.
A good wealth advisor can assist you in making informed decisions and provide personalized advice and guidance throughout every stage of your life. Whether you have multiple properties or a blended family where estate planning has become complex, a wealth advisor can guide you through the decision-making process.
You won't get a cookie-cutter approach when you work with a qualified wealth manager who operates within a fiduciary environment.
2. Risk Planning
From life insurance in the event of death or income protection to replacement earnings in times of serious illness or other complications, risk planning shouldn’t be overlooked when considering your future.
A holistic wealth management firm will aim to provide transparent advice about the types of coverage you may need depending on your earnings, health, and family situation.
While some wealth management firms may not have an in-house broker, they should be able to refer you to a reputable insurance broker who will seek to ensure your legacy is preserved.
3. Tax Efficiency
Tax-efficient investment strategies help you keep more of what you earn.
And if you're a high-income earner, then the government may be taking a large portion of your earnings. Tax planning is a critical part of wealth management. Tax planning can highlight areas where it's possible to minimize tax while still remaining compliant.
4. Tailored Retirement Planning
Do I have enough? How much do I need? When can I retire?
These are some of the most common questions people ask as they enter their 50s and start thinking about a work-optional future.
It's critical to ensure you have enough to retire comfortably.
A wealth management firm will help you with your financial planning and retirement planning. They will help you determine how much you should save and invest and how to create tax-efficient income streams in retirement.
5. Goal Setting
Setting financial goals is one of the key steps in the process of investment management.
Your wealth advisor will work with you to identify and outline important goals, like buying a vacation property, planning for retirement, or saving for your child’s college fund. Your goals will guide the wealth strategies used to create your customized plan.
6. A Greater Sense of Security
When you work with a wealth management firm, their goal is to help you preserve your wealth.
This involves putting a clear financial plan in place that aligns with your family's needs and goals. It also involves estate planning, retirement planning, and tax planning.
When you have taken care of your estate planning, have a robust portfolio, and know that you're not overpaying your taxes, you're more likely to feel a sense of security and confidence.
7. Debt Management
Wealth advisors can also help you make important decisions around the reduction and management of your debt.
This could mean reducing debt as quickly as possible, managing mortgage repayments depending on interest rates, or using credit to improve your financial position.
In addition, you may be thinking of buying a second property. Your wealth advisor can help you decide how to purchase this property and whether it makes sense over the long term.
8. Estate Planning and Dealing with Trusts
If you want to protect assets from estate or income taxes, a trust may be a good tool to use.
You can set up a trust for loved ones, charitable organizations, and other beneficiaries. Various assets can be placed in a trust, including money, investments, and property.
A wealth manager can guide you through the process of doing your estate planning and work with your estate planning attorney and accountant. They will aim to ensure your plan is executed in a tax-efficient manner.
Common Questions
What do private wealth managers do?
Private wealth managers help individuals and families navigate the complexities of investment management and big-picture financial planning in pursuit of their financial goals.
Private wealth management firms offer services such as investment management, financial planning, retirement planning, tax planning, and estate planning. Each wealth management firm is different, so make sure you find out which services will be included when you start working with a particular firm.
What is the difference between a wealth manager and a financial advisor?
Financial advisors work with a wide range of clients and offer a broad range of services to clients with a wide range of assets.
Many financial advisors have client minimums starting at $250,000. Wealth managers typically work with higher net-worth individuals and high-income earners who require assistance with more complex financial needs. A wealth management firm can offer greater value to clients whose financial lives are more complex.
How do I choose the right wealth manager for my needs?
Choosing the right wealth manager or wealth management firm will depend on many factors. First, make sure that you're comfortable speaking with your wealth advisor.
Next, make sure they have the right credentials and experience and be sure that they operate within a fiduciary environment. Finally, take a look at their experience to see if they have worked with other families or individuals with similar circumstances to yours.
A good first step is having an initial consultation to see if their services are aligned with your needs.
How do I know if wealth management is worth it for me?
Having $500,000 or more in liquid investments is a strong indicator that seeking the guidance of a wealth management firm would be beneficial.
This is particularly true if you're a high-income earner and want to preserve and accumulate wealth over the long term. The cost of working with a wealth management firm is typically worth it if your finances are complex.
If you have $1 million or more in investable assets, it may be risky to invest on your own. It’s important to have a financial plan, do critical tax planning to prevent overpaying your taxes and losing money, and establish an estate plan.
It’s also important that your investment portfolio effectively reflects your risk tolerance, values, and goals. Diversification is the key to managing and growing your wealth over the long term.
What designations should I look for in a wealth advisor?
Common designations that a wealth advisor may have include The Chartered Financial Analyst (CFA), Certified Financial Planner (CFP), Chartered Investment Manager (CIM), Trust and Estate Practitioner (TEP), and Accredited Investment Fiduciary (AIF).
Are wealth managers fiduciaries?
Not all wealth managers are legally fiduciaries.
A fiduciary is legally bound to act in the best interests of their clients. However, whether a wealth manager is a fiduciary or not depends on their designations.
Take a look at your wealth manager's designations to see if they are a fiduciary, and feel free to ask them. A reputable wealth manager will be happy to explain if they are a fiduciary or not.
Additional disclaimer: There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Other Articles and Guides
About 360 Financial
360 Financial is an independent wealth management firm with a team of specialized financial advisors and financial planners. As fiduciaries, 360 Financial’s advisors provide services to business owners, entrepreneurs, and professionals. We help investors with sudden wealth, retirement planning, tax planning, estate planning, and business financial planning.
Headquartered in Minnesota, we serve investors across the US with online and in-person wealth management and financial planning services.
