So congratulations, you made it big! You’re in your 20’s and sitting on a pile of cash. Maybe you made some smart moves in crypto, or perhaps you founded a startup that sold for millions. No matter how you acquired your wealth, the next step is to put it in a place that will ensure its growth and protect you from the all-too-common financial mistakes people make.
That’s where your wealth manager comes in…but what exactly do they do? And why, with all the options out there, should you trust them with your hard-earned cash?
We turned to Ken Julian of Halsey Associates for the answer. Ken is a professional client portfolio manager with decades of experience in wealth management and business leadership, so he’s the perfect person to help us navigate this complex yet essential topic.
“The first thing to do when you find yourself with a big pile of cash is hire the right wealth manager for you,” Ken says, “and I’m not talking about someone who can help make sure your money grows. I’m talking about an actual wealth management professional.”
In fact, there’s a lot more to wealth management than just investment guidance. According to Ken, “the very first question you should ask yourself is this: what, exactly, do I want to accomplish? Do I want to give my family a better life? Am I finishing up college or grad school and just need some help with the bills? Are you starting your own business and need some seed money?”
All of these questions could realistically lead someone to hire a wealth manager. However, the main difference between wealth managers and investment advisors is the type of advice they can give you. While both have access to many of the same tools (like retirement calculators and financial modeling software), a wealth manager also has access to a lot more information that’s specific to your situation.
For example, “your net worth statement, which tells you the total value of your assets and liabilities, is a very different document from an investment report,” says Ken. “While the investment analyst examines it solely to understand how to invest your money effectively, wealth managers can also use it to make sure that everything is in order. In addition, they’ll be able to tell you whether there are any gaps or mismatches in your financial life that need to be addressed.”
So how does wealth management work, exactly? While the exact process will vary from company to company, Ken says there are a few key steps you can expect most wealth managers to follow:
1. The first step their advice is always the same: evaluate where you stand. Most wealthy people don’t realize how much their money is worth until they sit down with a professional. A net worth statement will tell you exactly where you stand, and it’ll give your wealth manager a clear sense of what financial goals you’re trying to reach.
2. Next up will be the creation of a comprehensive action plan based on long-term goals.
3. Then, it’s time to put the plan into action. This is where your wealth manager earns their pay as they help you reach your goals. “A good wealth manager will always be looking for ways to make sure that your money works harder than you do,” says Ken, “and I think most people end up wanting a lot more from their money than just a little extra in their paycheck every week.”
4. Once the plan has been implemented, it’s time to evaluate where you stand and make any necessary adjustments.
5. And of course, wealth managers aren’t free — so they’ll want to discuss payment plans with you before they start helping out.
Ken also suggests that you consider avoiding the temptation to go with a “one size fits all” solution for wealth management. “There are lots of free tools available to regular people,” he says, “but if you’re looking for experienced advice that’s specific to your situation, then you need an actual professional who can provide expert guidance.”