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What Do Wealth Managers Do?

Job Descriptions September 25, 2013

There are a lot of different titles for different people that seem to be doing the same thing in business today. Take the title of wealth manager for instance. The job description comes out a lot like financial manager, but there are subtle but essential differences.

Without going too far into the weeds, a financial manager’s job is to help build wealth; a wealth manager’s job is to maintain it. The jobs are similar, however, different in many ways.

Why Wealth Managers Are Important

Let’s say a person is 50 years old and wants to retire at sixty and have accumulated a million dollars in assets. A good round number. In the 1960s, a person could put that money in the bank and draw 5% interest and live quite well, including maintaining the home, dining in some luxury, and travel overseas. Unfortunately, this is not taking into account inflation.

The government fosters inflation which reduces the worth of a person’s money. A wealth manager’s fist job is to see that the money maintains the same buying power over the course of time. The bank will now pay $5,000 a year from the client’s interest, and the stock market is the world’s greatest advertisement for Pepto-Bismol. Not a journey for the faint of heart!

Not only does the government instill inflation but it also taxes individuals, to and after death. A wealth manager must be aware of tax laws so that the beneficiaries, and not the government, get whatever wealth that is left to pass on. The government will take everything that is not nailed down. This career field is vital because it is really a matter of helping to ensure generations of family happiness.

Going back to our 50-year-old example. He might have a comfortable house, a small business, a moderate and diversified stock portfolio, by the time the kids are done with college. He likes to work and wants to, but not for the projected 30 years of life that he has left. He might already have a financial manager who is trying to grow his piece of the pie. Why not give him the job of preserving wealth too, because there are two different mentalities at work here.

Growth and Risk

In growth, you must be risk “accommodating”; in preservation you must be risk averse. Risk is a natural part life and finances, but the differences in mentality are whether you seek nominal risk or accept it when necessary. A wealth manager tries to squeeze the risk out of a client’s financial life.

Taxes are a surety, but are a risk to the wealth. One of the first jobs of a wealth manager is to make sure that the money outlives the client, and the second is to make sure that the government takes as little of it as possible.

Trusts, annuities, and other instruments are part of the career field, as well. The wealth manager works with clients to ensure their plans, dreams, and futures happen as desired. That is the goal of a wealth manager, to peer into a murky future and pull out a way for you to control your destiny, no matter what.

Wealth managers should be certified and may be or have been financial managers but understand the nuances of both jobs. By seeking this career path, you can be that trusted “navigator” that a client needs to traverse the shoals of the unknown future.

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