Lido Insights

3 February 2022

What Is A Wealth Management Planning Consultant?

By Michael Karsa, Senior Managing Director

We view Wealth Management as covering Four Pillars:

Investment Management

Current investors, especially those nearing or in retirement or faced with quite the uphill battle given today’s unique market environment. The retirement guidelines of a 60/40 portfolio or the “4% rule” have gone by the wayside. Valuations are the highest they’ve been since the internet bubble burst and can’t continue forever (1). On the flip side, bonds have always been viewed as a safe haven for investors seeking principal protection and income. The Barclays US Aggregate Bond Index returned -1.67% last year and faces an uphill battle as interest rates rise (2). A true wealth management planning consultant will bring to the attention of their clients, access to investments and strategies well beyond the stock and bond market. These investments can range anywhere from option hedges, private debt, private equity, real estate, and real estate debt and beyond. These alternative investment methods are often non-correlated to traditional investment markets, while offering potential income or total return benefits beyond what you would find in liquid markets.

Financial Planning

What does hiking a mountain and financial planning have in common? It’s not the accumulation of assets or hike up the mountain that requires the most strategy & planning. The hike down the mountain, or strategically planning the spending of the assets, is the most important. Questions like “Do I have enough to retire?” or “How much should I be saving each month for my children’s college?” are commonplace and they should all start with quantifying the goal, which creates a definitive destination. From there, a wealth management planning consultant should have both the tools and expertise to help find the best pathway to get from A to B in the most efficient way possible.

Tax Planning

All investors are fee sensitive and for good reason. It’s not what you make, it’s what you keep. For this reason, taxes should also be viewed as a fee or expense. A wealth management planning consultant will bring to their client’s attention both the tax efficiency of their existing investments, as well as their tax implications of their wholistic financial situation for discussion with the client’s tax professional. Whether it’s outside income sources, social security, or RMDs, there are plenty of future tax hurdles that require proper navigation both in the immediate and long-term. Proper tax planning can help save on taxes up front which can be invested over time as well for additional return, so the resulting added benefit can be very significant.

Estate Planning

Whether intended or not, everyone has an estate plan. The only question is whether it’s the government’s plan or their own. A wealth management planning consultant should know enough to be helpful when it comes to flagging items for discussion with the client’s attorney such as various estate laws, plans, and structures. Once identifying the specific opportunities within a client’s estate, it is best that licensed estate attorney is roped in and the planning consultant helps quarterback the estate plan in line with the client’s best interests. A proper estate plan can help eliminate probate, protect assets from creditors, as well as save significant taxes.

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