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Wealth Management Guide

Northwestern Mutual'south guide to wealth management introduces fine art and science of managing wealth, and how this highly personal service expands upon strategic principles established through long-term fiscal planning.

As your wealth grows, and so does the complexity of your financial life. Managing your wealth means paying attention to how you're growing your assets, protecting them, maintaining taxation efficiency, integrating manor planning or business succession and all the other goals y'all wish to accomplish with the money yous've earned. Simply put, wealth management brings together the dissimilar parts of your financial life to help each piece work virtually efficiently to get you lot to your financial goals.

What's in our wealth management guide?

Section 01 What is wealth management?

Wealth management, synonymous with wealth planning, is the fine art and scientific discipline of managing an private's assets. Tailored to the individual, holistic wealth management considers your values, goals, and ambition for risk then you tin live more and worry less.

While each wealth management business firm follows its ain methodology, wealth managers generally tailor their offerings effectually 4 key pillars.

Protect

Shield your wealth against myriad known and unknown risks through appropriate portfolio diversification, insurance planning, tax management, and more to give you flexibility and limit downside risk.

Grow

Seek growth opportunities that go deeper than beating a benchmark. A practiced wealth director individualizes your plan, whether you're interested in ESG, income-producing assets or building your own business.

Enjoy

You've worked hard for this life, and a practiced plan builds the flexibility and balance to enjoy your wealth how you wish today and without sacrificing your long-term goals downwards the road.

Give

Build a program to pass your avails onto heirs or through charitable donations through comprehensive estate planning and collaboration with the rest of your advisory team.

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Section 02 How wealth management differs from fiscal planning

Wealth management and financial planning are terms oft used interchangeably, only there are primal differences between them.

At its heart, financial planning is virtually understanding your financial goals and generating a plan that volition empower you to achieve those goals. To accomplish this, a financial advisor volition offer advice around (but not express to):

Saving
Insurance
Debt reduction strategies
Investing guidance
Retirement planning

Wealth management, past comparison, builds upon the core tenets of financial planning by layering on additional tools and specializations that aren't typically necessary until you've accrued sizable wealth. At that betoken, your financial picture has become more than complex and it becomes more important to consider services, such as:

Cash catamenia management
Accounting and taxation services
Will and trust organization
Advanced manor planning
Retirement planning
Liquidation strategies

Section 03 Who needs wealth direction?

While financial planning tin can assist anyone, wealth direction services are typically something you lot would add every bit you accumulate wealth. The corporeality you need to accumulate varies based on several factors, including your age, complexity of your financial motion-picture show and potentially the requirements of the firm you're working with.

All that said, typically it makes sense to begin considering wealth management once you've accumulated around $250,000 of investable assets or more than. If you're non quite in that location yet, that'southward ok. In fact, many people will start out with financial planning, which helps them grow into wealth management as they execute upon their plan over time.

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Which of these is a way to invest in the stock market?

Section 04 What's included in wealth direction?

To many, the term wealth management is synonymous with investing, but there's a lot more that goes into this service. For a wealth management strategy to be effective, it must be all-encompassing and highly tailored to you.

Goal Setting and Planning

Before you can have whatsoever journey, you must have a destination in mind. Wealth management is no different. Where exercise you lot want to become in life? That'south why a practiced wealth manager volition start by listening. They will start by listening and so inquire questions to get yous thinking nearly your goals in life. Your goals are destinations.

In one case you know your destination, you can program your route. By truly listening to you and understanding your ambitions, your advisor can help prioritize goals and assemble an array of flexible fiscal options to go yous there.
Managing Cash Period and Liquidity

If you are at the point in your financial life where you are considering wealth management services, you've probably established a savings regimen and have a well-stocked emergency fund. Nonetheless, there is value to be gained from an exterior, skilful perspective to ensure your cash flow is optimal.

For case, you may believe that you accept enough liquid savings to run into you through a prolonged market place downturn or financial duress, but you may take overlooked one, or multiple, risks which would signal that you should have a higher pct of your portfolio fix aside as greenbacks. Or, mayhap yous want to raise some cash to seize a market opportunity. A wealth manager will ensure you have the correct amount of liquidity to manage take a chance and remain opportunistic.
Investing

Growth through investments has, historically speaking, been one of the almost constructive ways to grow and accumulate wealth over time. But no investor is quite the same as the other, and a wealth managing director volition work difficult to tailor your strategy to your individuality. Your goals, your timeline, your risk tolerance, and your values should all influence the advice that you receive.

Generally, the investing strategy included in wealth management will include a mixture of general investing communication, personalized investments, portfolio management and advanced investment vehicles.
Insurance

While most people do not immediately recollect of insurance when they think of wealth management, information technology can play an important part in a comprehensive wealth management strategy.

As such, the engagement with your advisor is likely to begin with an evaluation of your existing coverage to determine whether it is appropriate, or whether you lot should consider additional types or levels of coverage given your risk exposure. This may include: inability planning, term life insurance, permanent life insurance and long-term care planning.

Thought Leadership

A groovy wealth manager doesn't simply execute your strategy, they help yous see the big picture. They'll leverage their expertise to regularly conform your plan equally necessary, bookkeeping for emerging trends and rotations in the market place, also as laws and regulations that may touch you lot. Forth the way, they'll offer general education and insights to go along you informed when sweeping changes impact markets or the economy.

If you similar to exist more hands on, your advisor is there to assistance and guide yous. If you're considering a detail investment, for example, they can help you confirm or deny your thesis, or else approach it from a new perspective that you may not accept considered.

Tax Management

A big office of wealth management is about managing both known and unknown risks that might otherwise derail your fiscal program. Taxes—income taxes, capital gains taxes, souvenir taxes, estate taxes, generation-skipping transfer taxes (GSTT)—are one such risk that can be a operation drag on your plan if they are non properly accounted for.

The skillful news is that, as a known take a chance, taxes tin can be planned for and strategies can be put in place to minimize their impact to your wealth. With this in mind, tax management will be fundamental to a wealth managements strategy.

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Your Compensation Program

If yous have a complex employee compensation program your wealth counselor tin can help you sympathize what you lot are being offered, what you are entitled to, and tin can assist in the valuation of your plan.

Stock options, deferred compensation, and other forms of equity plans can all exist first-class means of building wealth, particularly if your employer does well. Should y'all do your options and concord stock, or do and sell? Managing this aspect of your compensation bundle requires a strategy to optimally fourth dimension when to do it while besides keeping an eye on your taxes and overall asset allocation.
Retirement Planning

Many wealth management firms bundle retirement planning into their discussions about investing, and that makes sense: Investing consistently and regularly over the form of your career is the surest mode of growing the nest egg that yous volition eventually depend on during retirement. That being said, more goes into retirement planning than just investing. Once you lot've built your wealth, you likewise need a plan for how you volition apply that wealth.

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Manor Planning

Your wealth management strategy should also factor in questions of manor planning. A great wealth counselor will ask you key questions about how y'all want your wealth managed and divided upon your death, while besides ensuring you are taking advantage of your options to achieve your personal goals today.

For case, do you intend to leave an inheritance to your children, grandchildren, or other heirs? Practice y'all have goals for charitable giving? If you lot are a business organisation owner, practice you take a plan in place for business succession?

A few documents to consider: your will and trust, casher assignments and medical powers of attorney.

Could you use an expert in your corner?

A Northwestern Mutual wealth manager tin can help you build a long-term strategy that you tin can stick to in good times and bad.

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Section 05 Is wealth management worth it?

32%

Of Americans say their financial discipline improved during the pandemic, according to Northwestern Mutual'southward Planning & Progress 2021 study.

In order to understand whether wealth management is worth it to you, information technology's of import to understand the true value that information technology brings to your financial programme.

When you hire a wealth manager, you lot aren't getting a cookie-cutter financial plan or investment advice from a robo-advisor. You're hiring a professional or team of professionals whose job it is to listen to y'all, understand the goals you have for your coin, and make those goals a reality. You're getting a program that is custom built for your goals, your values, your risk tolerance.

If you're worried near the costs associated with hiring a wealth director, it can be helpful to understand the dissimilar means in which a wealth manager might be compensated.

4 common means wealth managers are paid

Fee-based planning: The client pays the wealth director unlike fees for different services. Mutual fees include an account set-up fee, annual retainer fees, and fees when executing specific trades, etc.
Percentage of Avails Under Management (AUM): The customer pays the wealth manager a pre-agreed pct of the total assets being managed. Many clients adopt this class of compensation, as information technology incentivizes operation.
Product committee: The client does non pay their wealth manager directly. Instead, the wealth manager is compensated by outside parties when they sell insurance policies, annuities, or other financial products.
Hourly rate:The client pays an hourly rate for work done by the wealth manager. Most wealth managers do not charge like this, merely some do.

Section 06 Choosing a wealth management company

If and when y'all make up one's mind that hiring a wealth manager is the right move for you, the next pace will exist to evaluate a few firms and select i that you believe will finer protect and grow your money.

One of the all-time ways of evaluating a wealth managing director is merely having an honest and open chat. During this conversation, you'll want to enquire them certain key questions that volition aid you gain some insight into their investment strategy and what you can expect if you determine to move forward working with them.

Conversation starters with an advisor

What is your investment philosophy?
How practise y'all benchmark performance?
What services aside from investing do y'all offer?
What are the fees?
If my goals alter, how might our date modify?
Tin I see an example of a fiscal programme?

Gear up for a conversation?

A Northwestern Mutual wealth manager is ready to answer the key questions you have

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All investments bear some level of risk including the potential loss of all money invested. No investment strategy tin guarantee a profit or protect against a loss. Working with a Wealth Management Advisor or whatsoever other financial services provider is non a guarantee as to future investment success.