Financial Planning vs. Wealth Management: Understanding the Differences
What is Financial Planning?
Financial planning is primarily based on strategizing a plan to ensure the success for an individual’s financial future. This can include budgeting, retirement planning, savings, tax strategies, and more. This process sometimes will involve a hired financial planner whose main job is to aid clients in reaching their financial goals. There are many types of certifications an advisor may fall under, including a certified public accountant (CPA), chartered life underwriter (CLU), certified financial planner (CFP), etc. Some advisors may also choose to work with a specific type of client, like retirees or business owners.
What is Wealth Management?
Wealth Management is another approach to client financial management, oftentimes looking at a longer period of time compared to financial planning. Services may include investment management, financial planning, tax services, retirement planning, legal planning, estate
planning, etc. Oftentimes, wealth managers work for a set of clients with a high net worth and will manage a large sum of assets.
Key Differences
Clientele
As mentioned before, financial advisors may work with a wide variety of clients from those who just began their financial journey to retirees looking to ensure they have enough money to last for the rest of your life. Wealth managers, on the other hand, most typically work with those with a wealthier net income with complex financial situations.
Scope of Services
The scope of services that financial advisors and wealth managers provide also differ. Financial planning revolves around activities that will help an individual achieve specific life goals, like buying a home or planning for retirement for example. Wealth managers take on a more holistic approach when servicing clients in order to grow and preserve one’s wealth in the long-term. While this may include some similar services to financial planning, it also may entail estate planning, risk management, or even philanthropic planning.
Approach
Overall, the approach that is most often taken within financial planning is by focusing on financial life goals. Financial planners then will often help their clients strategize to ensure they can reach milestones they set for themselves. The more common approach within wealth management is to have a more comprehensive or long-term view of one’s finances, continually monitoring and adjusting strategies in responses to complex circumstances.
Conclusion
Overall, while financial planning and wealth management may differ, that does not mean that one is necessarily better than the other. It completely depends on the individual and their unique financial circumstance. Here, at Capital City Financial Partners, we want to provide clarity to you and your financial circumstances as best we can. Unsure if you are seeking out a financial planner or wealth manager? Schedule a complimentary meeting today by calling our office at (803) 782-0671!
Source 1
Smart Asset – Wealth Manager vs. Financial Planner article
Source 2
360Financial – What Is the Difference Between Financial Planning and Wealth Management? article
