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After Navigation
Home Money Management Investing What is Wealth Management?
  • Contents
  • 2 Types of Wealth Management Financial Services
  • How Does Credit Factor into Wealth Management?
  • How Do You Establish and Maintain Good Credit?
  • What's the Best Way to Think About Wealth Management?
  • Why Wealth Management is for You

What is Wealth Management

ARindfleisch
By Ainsley Rindfleisch
November 14, 2022
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How often do you think about your financial well-being? Do you think that wealth management is the sort of thing that only the very wealthy engage in? While generally, a wealth management firm offers its services exclusively to folks that are looking to safeguard and grow their millions, the concept of developing sound wealth management schemes is something that everybody could be actively engaging in.

Wealth management is a service that offers financial advice and combines other financial services to address the needs of clients. Affluent clients are those who would most benefit from obtaining wealth management services and an appropriate minimum investment would be between $2 and $5 million. 

According to the Bureau of Labor, there are an estimated 264,000 personal financial advisors in America. Though that number seems quite large, only 35 percent of Americans employ a financial advisor. Although financial literacy can be an intimidating concept, it is also one of the most important concepts to master if you plan to live a healthy financial life. Engaging in an investment strategy early in life is tantamount to a wealthy client enlisting a wealth management firm to handle their assets; both can serve you well in the long run.

2 Types of Wealth Management Financial Services

Estate Planning

There is a range of services concerning financial welfare. Another type of financial service is estate planning. This is the process of evaluating and arranging the transfer of an individual's assets in anticipation of death. It aims to preserve the maximum amount of wealth possible for the intended beneficiaries and flexibility for the individual before death.

One aspect of estate planning is to establish a financial power of attorney. This is an agent who is responsible for managing your finances for you in the event that you cannot do so yourself, especially after death. Besides distributing assets to beneficiaries, the financial power of attorney covers tasks such as making bank deposits, paying bills and collecting insurance benefits. 

There are different levels of power of attorney, such as limited and general. Limited power of attorney restricts the agent's power to particular assets. General power of attorney allows the agent to make a wider range of decisions. It allows the agent unfettered freedom when it comes to handling assets and managing care.

Robo-Advisor

Most young people who might not qualify financially for estate planning services would benefit from a robo-advisor. Robo-advisors are a type of online tool that offers financial planning advice to people with minimal human interaction. This kind of automated wealth management is able to run because of mathematical rules and algorithms and it usually requires no minimum investment. 

The advanced software used by robo-advisors is capable of building and managing investment portfolios. With little or no human interaction necessary, these advisors offer services from automatic rebalancing to tax optimization. Most have human representatives available for questions, when that service is requested.

How Does Credit Factor into Wealth Management?

A credit score is a number, ranging from 300-850, which represents the likelihood that a person will repay their debts. This number is factored by three major credit bureaus: Transunion, Equifax and Experion. The vast majority of banks and lending institutions use the scores that are generated to determine to whom they will loan their money and at what interest rates.

There are different levels of credit and they range from poor to excellent. A FICO® credit score in the 700s or 800s is considered very good to great. While experts say that you need a minimum credit score of 660 to go car shopping, they also agree that walking in with a score that's higher than 800 will get you the best deal. This is because the dealership wants your business because the bank is letting them know that you'll likely pay on time, every time.

Credit matters to everybody. Good credit allows a person to borrow greater amounts of money at lower interest rates while bad credit does the opposite. Banks have reservations about making loans to people with a bad credit history and poor credit scores and when they do, they offer high-interest rates. Managing your credit habits in a way that establishes and maintains a strong credit score is one of most people's first steps into wealth management. If not done correctly, you can see your options dry up quickly.

Your credit score is the difference between financing the car you want or settling for something cheaper. The words 'more affordable' aren't really apt in this scenario because it's not whether or not you can afford the car, it's how you've demonstrated your ability to do so with other objects in the past. Many people get their first credit cards when they go away to college and this is a particularly stressful and dangerous time when it comes to setting up your financial stability.

How Do You Establish and Maintain Good Credit?

A key to maintaining good credit is diligence. You must pay your loans on time, every time they come due while maintaining some distance from your credit limit. A long credit history will help your score, so making big purchases from time to time can be beneficial, if properly planned.

Read more >>> What is a Good Credit Score?

What's the Best Way to Think About Wealth Management?

Wealth management might be thought of as a financial service that takes a holistic evaluation of  your financial picture. The service is associated with wealthy clientele who have a portfolio that needs to be managed by professionals who have a deep understanding of the many fields within finance as well as the trends of the markets. 

However, everybody should be actively engaging with their own financial health. In this regard, there are many ways to practice different kinds of wealth management, from obtaining the right college loans to working with robo-advisors to tax planning. When you take the time to study your options, your decision-making process improves. At its core, wealth management is about using knowledge to make decisions. The third factor is experience.

Why Wealth Management is for You

Wealth management starts earlier than you think. For most people, living comfortably and retirement planning are the objectives, so you actually begin managing your wealth the first time you receive a paycheck. Then, as you earn and invest your money, you'll begin developing your assets. Investing in higher education is another important step to establishing a favorable financial situation down the road.

 
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Edvisors (“Edvisors Network, Inc.”) provides independent advertising-supported platforms for consumers to search compare and apply for private student loans. Loan offers from participating lenders that appear on our websites are not affiliated with any college and/or universities, and there are no colleges and/or universities which endorse Edvisors’ products or services. Lender search results do not constitute an official college preferred lender list. Edvisors receives compensation from lenders that appear on this site. This compensation may impact the placement of where lenders appear on this site, for example, the order in which the lenders appear when included in a list. Not all lenders participate in our sites and lenders that do participate may not offer loans to every school.

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