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Are wealth management and investment management the same thing?

Managing your portfolio is only one piece of your overall financial well-being. Vince Crivello shares why estate considerations, tax strategies and more play a critical role in aligning your wealth with your wishes.

Transcript

Tim Maurer:
Tim Maurer back with another episode of Ask Buckingham, a new video podcast designed to bring clarity in the midst of confusion by connecting your great personal finance questions with straightforward answers from industry thought leaders. Today’s question will be answered by Vince Crivello, Buckingham’s Vice President of Practice Management. Vince, the phrases wealth management, and financial planning, and investment management seem to be thrown around as though they are synonymous. Is this phrase, wealth management, just a fancy phrase for charging me more for investment management?

Vince Crivello:
Candidly, Tim, in many cases it is. Been looking at this phrase, and the wealth manager now for 25 years, and it is often misused and misrepresented out there in the industry and so there is no consistent definition of what a true wealth manager is.

Tim Maurer:
Okay. Then, what is it that you would say would differentiate investment management from, say, financial planning or wealth management, if they are different?

Vince Crivello:
Yeah, great question. At the foundation, if you think about what an advisor does, and we often refer to what we internally call the pyramid to help clients better understand all the different elements that are involved in true wealth management. At the foundation, absolutely, there’s the money and investment managers and advisors are there to help the advisor optimize their portfolio, and their goals, and savings, and tax and so forth. Absolutely a foundational aspect of what they do.

Vince Crivello:
As you think about the advisor and what they also do, and arguably more important, is really helping clients determine goals, and trade-offs, and priorities, and trying to balance all the different things that as consumers we need to balance. That might be saving for education versus retirement or helping your parents versus helping grandparents or other family members, a variety of things. Through the planning process, the wealth management process, you can get clarity around what’s truly important, not only from a financial standpoint but from a goal or value standpoint.

Tim Maurer:
It seems to me that wealth management then is both broader, if you will, and deeper in its scope. You’re spending more time getting to know who the client is, not just determining what they should do with their money. It’s not just investment management, it’s going to include everything ranging from cashflow management to education planning, retirement planning, tax planning. Is that what you’re saying?

Vince Crivello:
Yeah, Tim. Let’s take that one step further because unless you really understand what the client truly values and, especially during times like this, a lot of those questions should be asked, and reviewed, and discussed with your advisor. At times like this you may want to explore things like spending more time with kids and grandkids and maybe focusing less on work or maybe doubling down on work because that’s what you need to do now, but maybe rethinking retirement. There’s so many things that need to be reviewed and discussed beyond just the money, beyond just the financials as we really take this pause in life to figure out what is truly important.

Tim Maurer:
It’s interesting because crazy times like the one that we’re going through with the COVID-19 pandemic, it’s almost as though it begins to peel back a layer, give us more of a glimpse into what is most important in our lives, don’t you think?

Vince Crivello:
Yeah. I think when we went through this in ’07, ’08, and ’09 with the financial crisis it was really a money problem, it was a liquidity problem in the markets. I think what we’re seeing now is, between social isolation and time away from people that we just took for granted, whether it might be our parents or grandparents or loved ones or colleagues at work. It’s really giving us an opportunity at some level to reflect on what is truly important and how do we determine that. A good financial advisor, a good wealth manager is going to look, again, beyond the money to really understand what are those core values, those core principles that are important to each one of us and that are unique to each one of us.

Tim Maurer:
Seems to make wealth management even more important in a time like this, even more of an opportunity for someone to benefit and find, frankly, silver linings through these scenarios. I know that you and I have both had conversations with clients, friends, and family, folks who are really struggling through this time personally, feeling completely out of sorts. Those who would almost say, “Gosh, I’m scared. I feel bad for folks who are struggling through this crisis but I’m actually having some more quality time with my family. Isn’t that interesting?

Vince Crivello:
Yeah. I’ll just share a personal example I grabbed before the webcast. I’ve gone through an exercise here of really story boarding, looking back at the last 51 years and thinking about what was important to me and I created various tranches of my life. Through that exercise, and I would encourage people to journal or to illustrate and really reflect on across all those milestones what are truly those things that drove you, that you were passionate about or that concerned you.

Vince Crivello:
Write it down, pencil it out and really get together with your advisor and really reflect on all those things and how that might change your financial plan going forward. That’s what a true wealth manager will do is really understand the life and the money that’s involved in those priorities.

Tim Maurer:
Thank you, Vince, thanks for broadening our perspective, and thank you for tuning in to this episode of Ask Buckingham. If you have a question that you’d like to see us address, you can do so by navigating to the website, askbuckingham.com or by emailing your question to question@askbuckingham.com, or take it easy and just click in the upper corner of your screen. It’ll take you directly to the website where you can ask your question and view all the many other videos that are there for you.

Tim Maurer:
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