Is asset management the same as wealth management?

Is asset management the same

as wealth management? Okay, I’ve done a

series of videos on wealth management and

this is going to continue. I’ll probably do several more.

So if you’re a member of the retail investing public, you might

find this interesting, because my focus on this

is going to be to the industry. So if you’re a financial advisor

or you’re in the financial services industry, I want

to address you directly. The clients are

confused about this term, wealth management.

Now in other videos, I’ve talked about how I personally

don’t like the term because it was invented

by firms that, that mainly focus

on the wealth and the money as opposed to the clients.

So no judgment there.

And there are many firms that are set up that are designed

for investment management exclusively. They don’t really

even much know the client, nor do they know the client’s objectives

or much about them. They are simply money

managers or investment managers and they

focus on wealth management. Well, let me tell you,

I’ve seen the data on this. The problem with it is the

clients are confused. So wealth management, in the

mind of the client means different things to different people.

And I can tell you, coming from the industry,

it definitely means different things depending on what firm you’re

in. Now, I’ve said before, this term,

wealth management is, it’s a marketing term.

It doesn’t have any industry defined term

like definition. And so I

recognized this almost 25 years ago

and I trademarked a term

that I thought might clear it up and at least it will

clear it up for my clients and for my

financial advisors working for me. So the

other term that’s kind of the dances with wealth

management is comprehensive financial services,

yet another industry term that means different

things to different people and has no industry,

no industry definition. It is again,

a marketing term. So let me address this.

Comprehensive financial services wealth management. And I

want to talk directly to financial advisors. My advice

is to be very clear. What we need to do in

the industry here is go for clarity.

Now, when you’re sitting down with a client and you’re explaining what

you do. Well, look, if your firm

says wealth management on the firm name, or if it says

comprehensive financial services on your website, and there’s really nothing

you can do about that, okay, fine.

What you need to do for the client is define specifically

what that means. So you tell the client,

look, we offer wealth management,

and here’s the definition of that.

And it’s in essence, for this fee that you’re paying us,

here are the client deliverables that you will receive for

wealth management. Now,

having been inside the industry for decades, I can

tell you, most of the firms, when they say wealth management,

they do mean investment management. But I can tell you

from a client perspective, in their mind, what the

client often thinks when they hear wealth management

is comprehensive financial services. In other words,

I’m hiring this firm and I want them to coordinate all

of my wealth, not just my investments, but,

you know, everything. Yes, the investment management,

but the financial planning, which involves planning

towards my goals. You know, that, that our

family has financial objectives that require money

and planning to achieve. And we thought when we were hiring

a wealth management firm, they would manage our wealth towards

our objectives. And that’s not the case.

In every case, tax planning,

estate planning, all of that, you know, in the

mind of the client, the client often thinks

when they see wealth management that it’ll be a comprehensive solution

for their money stuff, that all their money is going to be

planned out in all areas of finance.

So this was something that was

very obvious to me a couple of decades ago. So the

term that I trademarked and, and that we

utilize with our clients and I’ve been working with financial

advisors for over 20 years and training financial

advisors. And so we train this methodology.

And the thing that I have done is to

trademark the term truly comprehensive

financial services. So I

added the word truly in front of comprehensive financial services.

Now I’ve got a trademarkable term. And so truly

comprehensive financial services at our firm and with the advisors

that we train means a very specific thing

to the clients. Now let me define it for you,

and if you’re a client listening to this and your advisor

has said, oh yeah, we’re wealth managers, then you can go back

to your advisor and ask them, is this what you

mean? So truly comprehensive financial services

means delivering ten client deliverables

every twelve months to every client. So we

have 142 point checklist.

Those 142 items on the check, on the annual

checklist cover the five areas of personal finance.

That’s yes, investment management for sure.

So investment management, financial planning,

which is managing and planning towards goals

set by the client. So investment management,

financial planning, financial planning,

estate planning, tax and

risk and safety. So when I say risk and safety,

yes, I’m talking about looking at all the reviewing the

insurance annually to make sure that the client has

the right kinds and the right amounts of insurance. But when you

think in terms of risk and safety planning, it’s, you know,

insurance, just a small component. It’s that every

plan has risks associated with it.

Some of it is investment risk, some of it is,

you know, if a client of mine is a business owner, there may be liabilities

related to the business. But all I’m saying is

risk and safety is a separate category that

we provide as a service to our clients.

So the ten client deliverables, in essence,

boils down to approximately two client

deliverables for each of the five areas of personal

finance, investment, financial planning,

insurance, tax and estate planning. So,

you know, so on our team we have a chartered

financial analyst who’s a money manager who manages the

money, the investments. We have a certified financial planner

who sits down with the client, establishes the goals and

the objectives for the client, and puts a plan together to

achieve the goals. Then we have a certified

public accountant CPA expert in tax who creates

a comprehensive written lifetime tax strategy.

We have an estate planning lawyer on the team that creates

a comprehensive written lifetime estate plan. And then

finally we have a risk and safety expert.

Usually it’s a retired executive

from a major insurance company, but it could be an expert who’s

written a textbook on risk management. But what, at the end

of the day, it’s a fee for service expert who

creates a comprehensive written lifetime

plan for the risk and safety of this plan.

And so you have these five plans created and

updated annually. And then there are just lots of action items

and recommendations that are required for the

client to remain on track. So that’s how we define

truly comprehensive financial services. It involves

all the areas of personal finance. It’s updated

annually. We are so proactive that if a

client ever drifts off track slightly because

of movements in the market or anything that comes into the

plan that’s unexpected, the client will,

you know, we guarantee the client will remain on track because

we will be the one informing the client that they’ve drifted off track. And we’ll

pull them in for a meeting and we’ll be prepared with all

the recommendations to get the client back on track.

So the bottom line, client outcomes that a client can

expect from truly comprehensive financial services

are as follows. Number one, the client

knows that they’re always on track and they’ll stay on track

because if they ever drift off track, we’re going to pull them in and provide

them recommendations to implement, to get them back on track. So they’re

always on track for their goals. Number two, there won’t

be any surprises. And so this is the,

this is the commitment that I make to my clients and that

as we train advisors, we recommend that all of our advisors

make this commitment to their clients. There won’t be any tax surprises there

will not be any planning surprises whatsoever.

We are so proactive, and we are so on top of your financial

affairs. No surprises. So. And then

the third is that we assure the client the

outcome they can expect is that they will make better

financial decisions in all areas

of finance with our team in place than ever

before using our team. So once our

team is working for the client, it could be any area

of finance, including major purchases

or literally any financial decision. You know,

they want to buy a vehicle, should I buy it? Should I pay cash?

Should I finance? Should I lease the vehicle?

Just anything related to the financial strategy.

Our team is on it, and we’re on it in a very proactive

way. So it’s not just narrow investment management.

I was talking to an advisor today, really, really nice

guy, good guy up in New England. I’d never met

him before, but I get on the phone with him and immediately

he apologizes for being a couple minutes late.

We were set up to talk by Zoom.

We were introduced through another way. And so I

had a Zoom meeting with him, and he got on the Zoom call and he

said, oh, I’m so sorry I’m a couple minutes late. There was just

some movement of the military in the Middle east, and, you know,

now there’s fears of, you know, escalation of war and terrorism.

And so I got, I immediately got seven calls

from my clients. And we’re, we’re busy with the markets today.

And I’m thinking, so, so I said, what’s your business

model? Because, see, in our business model, there are no planning emergencies.

You know, yes, there are world events like this guy’s describing.

And of course, we plan through all sorts of contingency

situations, but it’s long term planning. So we don’t,

you know, if there’s some major world event or some

economic news or political shock to the system,

it might affect the long term plan, but it’s not going to

affect it today. So there may need to be a course correction.

But I asked this guy, I said, so what’s your business model?

And he said, oh, well, we help small business owners.

I said, great. So what do you do for the business owners?

And he started talking to me about that. They have a very unique

investment strategy and they use futures and

so forth. And I started to ask him,

I said, so it’s investment management? And he said, no,

no, we help our clients kind of stay on track. And I

said, stay on track to what? And he said, oh, well, we have

an accountant that here locally that we refer our clients

to, if they need taxes, strategies.

And then we have a, we have an estate planning lawyer

here locally that if the client needs estate planning,

you know, we refer to them. So he has a referral relationship.

So the problem was, I kept asking

him, are you delivering comprehensive financial services?

And he said yes. But then he kept coming back to,

I stick with the markets. I’m watching the markets all

day, every day. And when things happen in the market, they have some

kind of short term strategy. And I’m saying that that is

not what I would define as truly comprehensive financial

services. In my world, there is no client who

might need tax planning. They all need tax planning.

And there’s no client that, you know, that I would say,

if you need estate planning, I’ll refer you to somebody

locally. No, no, no.

Everybody needs estate planning. I mean, you know,

at some point you’re not, you’re going to be unable or unwilling to manage

your own affairs at some point in the future. So there better be a

plan in place. So in my world, truly comprehensive

financial services envisions every contingency.

We’ve already got a team in place. We’ve got accountants and estate

planning lawyers and money manager. And it’s

just a very cohesive team that’s literally overseeing

everything and making sure that when something drifts off track, which it

does, that we are right there proactively to

course correct and get it back on track. So I

think you’d agree that is a very specific definition

for comprehensive financial services.

Now the question is when your advisor says they offer

comprehensive financial services or wealth management,

which is again the marketing buzz term that I’ve seen so frequently

in the last, I don’t know, ten years. It’s a vague

term. You’re going to do yourself a favor. If you’re

an advisor, you’re going to do yourself a favor. Being clear with

your clients as to what they can expect. And if you’re a client, you’re going

to do yourself a favor. If you get your financial advisor

to very specifically define,

what do you mean when you say wealth management?

And make them get down to, you know, what are the outcomes

I can expect as a client because I’m paying you this fee for

wealth management. So I hope that helps. I’ll probably end up having

to do more videos on this, this term

wealth management. But that’s the issue that occurred to me today,

mainly because I came across a very skilled, very nice investment

manager who was honestly very unclear

in his ability to describe to me, and I’m assuming to

his clients specifically what he does.

So anyway, until next time, I’m mark little.