All About Wealth Management

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What is Wealth Management?

The term “wealth management” covers an array of services, combining Financial Planning, Investment Management, Estate and Tax Planning.

Macdonald Wealth seeks to address three main issues: the deployment of your wealth during your lifetime; preserving your wealth and finally, planning the distribution of your wealth.

Why work with a Wealth Manager?

Choosing a wealth manager and getting proper, professional advice may be one of the most important financial decisions you ever make.

Many people seek the help of a professional wealth manager because they have a particular financial or lifestyle goal in mind, such as saving for a child’s education fees, managing your estate for future generations or putting money aside for a comfortable retirement.

At Macdonald Wealth we will help assess your current situation, create a bespoke financial and investment strategy to help you make the most of your money and achieve your desired lifestyle.

It cannot be stressed enough that having an adviser on hand who knows your financial situation and goals intimately and who has taken the time to really understand your risk profile can be invaluable. With a professional on board, you will be far more certain of achieving your long-term goals.

As your wealth grows and time goes on, your financial situation will likely grow more complex and ensuring your wealth is protected and you are getting the best return on your investments often becomes more complicated. Your wealth manager will ensure your investments and risk exposures are appropriately managed and performing optimally with asset allocation consistent with time horizons ensuring all your investments are married up and working in the same direction.

What is the Wealth Management Process?

When you first meet your wealth manager, we will start by trying to understand your current financial position as well as your needs and aspirations.

The first meeting will include an in-depth discussion of your current financial position, your overall goals and attitude towards investment. This could include your retirement plans, what pensions and other savings you have in place along with encouraging you to think about inheritance tax planning.

Once agreed on the nature of services required, your wealth manager will likely build a bespoke financial strategy drawing upon their extensive knowledge and expertise to put your money to work, utilising all available tax-efficient wrappers and selecting a diversified range of investments that are suitable for your needs.

As your financial goals or circumstances are likely to change over time, so you should then look to meet your wealth manager to review your progress and assess any changes going forward this will ensure your portfolio remains suitable over the long term safe in the knowledge that your money is being looked after by a trained professional with years of experience.

Onboarding process of client

The process of becoming a client is really just the start of what should be a very productive dialogue over time.

The process of becoming a client can cover a range of elements, some are about rules and regulations, others involve your wealth manager understanding you as an individual and formulating an accurate plan to achieve your goals.

Wealth Managers are subject to a plethora of rules and regulations intended to protect investors and therefore there exists a range of checks and assessments which need to be carried out and documented at the start of a relationship such as Anti-Money Laundering (AML) and “Know Your Client” (KYC). Although it might feel that you are being asked a lot of questions, you can rest assured that every client has to go through the same process, indeed often these conversations can uncover a need or gap in your strategy which can actually be very useful.

Once your objectives and situation has been fully discussed, your wealth manager will accurately determine your risk profile using both psychometric risk-profiling tests and qualitative approach based on detailed discussions. Based upon this your wealth manager will be able to create of a bespoke strategy which will be suitable to both your needs and risk profile.

Your wealth manager will look to present your plan to you in a suitability report which effectively “plays back” your investment profile and what you are asking your wealth manager to achieve.

Finally, once everything has been approved and documented on both sides your account will be opened can then be funded with your wealth manager investing this in accordance to the agreed parameters. From here on in, you will be looked after by your Wealth Manager in accordance with your ongoing service agreement.

What are the Fees involved?

Engaging a professional wealth manager involves fees, the key is to determine the value added or value for money.

Drawing upon the wealth managers vast experience of financial planning can lead to better outcomes for clients with solutions delivered in a more tax-efficient manner. Similarly, your wealth manager will have access to more cost-effective fund units than a comparable do-it-yourself investor, not only this but utilising quality research and expertise can boost your return potential while minimising risk.

Finally, it is hard to put a price on the peace of mind that comes from having an experienced manager handle your investments.

Your wealth manager will be transparent about their fees, by including details about all relevant fee schedules for their services. Therefore, at the start of the relationship it should be very clear about what you will be paying, when and why, which must be documented and agreed by you.

Depending upon the level of service agreed, there could be several components making up the total charges, the following gives an overview of the charges which are typical of a wealth manager.

Financial planning services are likely to be charged separately, perhaps as a standalone fee.

Annual management fees seek to cover the ongoing advice, investment management expertise and back-office support required to continue monitoring your financial plan. They can be quoted as annual fees, but are usually charged monthly, either on the value of the portfolio on a specific date, or on its value averaged out over the period.

Transactional fees are levied only when a client is not covered under an ongoing annual agreement and that the client requires services on an execution-only basis.

As you will now appreciate, there are several components to your wealth management fees. However, your wealth manager will provide you with one ongoing charging fee (OCF), indicating how much you will be charged for the entirety of your service. This will be an annual charge calculated as a percentage of your total investment and should include all charges and fees applicable.

Investors need to make a full appraisal of all the expertise and capabilities covered by a wealth manager’s fees – and appreciate the full value a professional could add.