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Wealth Management 101: Who Needs It?

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Unfortunately, most people aren’t inherently wealthy. And we all know that wealth doesn’t usually appear out of thin air. So, you must work hard and be smart about your financial decisions to build wealth. Further, once you’ve established wealth, keeping it requires discipline and good management. Both building and maintaining wealth is accomplished through effective wealth management.

At most financial firms, wealth management is reserved only for high net-worth individuals, but here at DreamWork Financial Group, we adamantly disagree with this philosophy. To take this a step further, we believe You Don’t Have to be Wealthy to Have Wealth Management®.

What is Wealth Management?

Wealth Management is a comprehensive financial program that combines financial planning with investment management. This includes setting your financial goals and crafting a portfolio to help you meet them.

An effective wealth manager will get to know you and your unique vision for the future, then compile information from various professionals, like accountants and attorneys. With this information, they will provide a comprehensive plan designed to maximize your personal wealth and meet your financial goals.

What makes wealth management different than the plan I got from my financial planner?

Just like any specialized profession, financial management is quite complicated. A financial plan can help you determine your savings goals and monitor aspects of your finances like your income, expenses, and debt. But a financial plan is often not enough.

Once you’ve created your plan, you must then decide which investments will maximize your returns while managing your tax liability and minimizing unnecessary risk. And you must constantly monitor each individual investment to ensure that they continue to meet your needs. In order to do that, you must follow global financial markets, world politics, and current financial events. If this seems like a lot of work, that’s because it is. Which is why most people choose to work with a wealth manager.

A wealth manager will bridge the gap between financial planning, investment management, tax planning and estate planning. Once you’ve determined your goals, a wealth manager will help you craft a portfolio that matches your unique situation and investing preferences. Additionally, a wealth manager will monitor the markets and your portfolio to ensure you stay on the right path to achieving your goals.

How to Select a Wealth Manager

At DreamWork Financial Group, we like to think of your personal wealth manager as a golf caddy. First, a great caddy does a lot of work in the background and helps you execute the shot that the two of you have agreed upon. Second, he knows you inside and out. Finally, he knows when to speak up and when to back off. He wants you to be prepared for every situation and your success is paramount.

Bad caddies (and advisors) know very little about you, and often put you in bad situations. A bad advisor can even become a source of added stress. Having wealth management should greatly reduce your stress, not compound it.

An Effective Wealth Manager Will:

  • Be familiar with your personal situation
  • Answer your questions in a way you can understand
  • Educate you on potential investments
  • Respect your opinions and beliefs
  • Monitor and report on your investments
  • Stay in touch

Here are a few things to keep in mind when selecting a wealth management service:

Selecting a wealth manager can be a daunting task. After all, there are many firms and advisors competing for your business. When selecting a wealth manager, keep these tips in mind:

1. Experience Matters When Choosing a Wealth Manager

Partnering with an experienced advisor that has weathered wild markets can help prevent costly, emotionally charged, investment mistakes that come with inexperience. The best advisors work to make sure your assets generate cash flow and protection during market downturns, all while being well positioned to take advantage of growth during bull markets.

2. Your Wealth Manager Should Take the Time to Get to Know You

Your advisor should work to understand your specific situation. If your wealth management firm doesn’t make the effort to familiarize themselves with your specific personal situation, be skeptical. You may be just another number.

On the other hand, when major events change your life, such as having children, losing a job, getting married, or getting sick, you need someone to give you smart advice on how to adjust your financial plan. When your advisor knows your personal situation, they will be able to help you make necessary changes to how you are managing and investing your wealth.

3. Your Wealth Manager Should Work in Your Best Interest

Throughout life you will be presented with numerous investment ideas. These ideas are often pitched by very talented “salespeople.” It is important to have someone you can trust to help you vet these ideas to ensure your financial stability.

The amount of data out there is immense, so having someone to help you make sense of it all is critical. Whether it applies to public, private, real estate, or other types of investments, a trusted advisor is the perfect sounding board to help you make confident decisions.

Unfortunately, all investment advisors are not held to the same standard. Only fiduciary advisors are legally obligated to act in your best interests – all of the time. With a fiduciary advisor, you can rest assured that all of their recommendations are made with your unique goals and situation in mind.

4. Your Wealth Manager Should Tell You How They are Compensated

With some firms, there are many hidden investment fees. But with a fee-only RIA, like DreamWork Financial Group, you are charged only a flat percentage of assets under management.

This fee structure eliminates the conflict of interest inherent in compensation via commissions. When advisors are paid based on the products they recommend, this can lead to a conflict of interest between the advisor’s paycheck and the client’s returns. With a fee-only RIA, this conflict is eliminated because our advisors are never paid based on commissions. Additionally, when advisors are paid based on assets under management, we make more when you make more.

5. Your Wealth Manager Should Be Available

Your wealth manager should be available to discuss your portfolio and hear your ideas. At DreamWork, we create a financial partnership with our clients, where their input is always welcome. Additionally, we always answer our clients’ calls. And if we aren’t available, we return your messages promptly.

6. You are the boss, and your wealth manager is your employee.

If an employee doesn’t meet your expectations at work, then you have a choice to make. The same holds true with wealth managers. Don’t be afraid to voice your opinion or change your advisor if necessary.

How Are Wealth Managers Paid?

At DreamWork, we believe transparency is key. When you hire someone to manage your money, you deserve to know how much you will pay upfront. That’s the reason we only charge a flat fee, with zero money paid upfront, and no hidden charges or commissions. This is called the “Fee-Only” model.

Since our fee is a percentage of assets under management, we make more money when you make more money, so our incentives are aligned. We want you to make as much money as possible, so we make as much money as possible. In contrast, if you lose money, our revenue drops proportionally.

Conversely, many firms employ brokers who are rewarded with commissions based on what they sell to you, regardless of how those investments perform. Often these brokers are not bound by a legal obligation to act in your best interest. This means, without a fiduciary duty, brokers can sell you the products that make them the most commissions, even when more appropriate, less expensive options are available.

As a fee-only RIA, we are required by law to act in your best interest regardless of the impact to our bottom line. So, with the “fee-only” model, there are never any conflicts. Your best interests are our best interests.

Where can I get comprehensive wealth management services?

If you’ve made it this far, you are clearly diligent with your investments and concerned about your financial future. We hope this information helps you to find the best possible wealth management firm for your situation. We also hope to get an opportunity to prove to you that DreamWork Financial Group is that firm.

At DreamWork, we believe that a wealth manager should be someone that you know and trust. This is why our fiduciary advisors take the time to get to know you and your unique situation before making recommendations. In addition, our innovative wealth management program, Investing Gameplan™, is a financial partnership that allows any investor, regardless of their account balance, to access custom portfolios and fiduciary advice.

To learn more about DreamWork Financial Group and Investing Gameplan™, contact us today.