LIDO INSIGHTS | What Is A Wealth Management Planning Consultant? | February 2022
By: Michael Karsa
We view Wealth Management as covering Four Pillars:
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.
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.
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.
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.
Lido Advisors, LLC is an SEC-registered investment adviser. Please note that SEC registration does not denote any particular competence or ability and no inference to the contrary should be made. For complete information on the services we provide and our fees, please review our Form ADV at adviserinfo.sec.gov, call (310) 278-8232, or mail us at 1875 Century Park East Suite 950, Los Angeles, CA 90067.
Estate planning services are provided through a strategic partnership with a trusted third-party law firm. They are the source of the information herein. Lido Advisors, LLC is not licensed to, nor does it, provide legal advice or services. Tax services are provided through affiliate organization L-TAX, LLC. Lido Advisors, LLC is not licensed to, nor does it, provide tax advice or services.
Not all investments are suitable for all clients. It should not be assumed that any security listed or any recommendations made in the future will be profitable or without loss, including risk of loss of principal, or will equal any prior performance. All investments involve the risk of potential investment losses including the potential risk of loss of principal as well as the potential for investment gain. Further, the prior performance figures indicated herein represent portfolio performance for only a short time period and may not be indicative of the returns or volatility each portfolio will generate over a long time period. The performance of the portfolios should also be viewed in the context of the broad market and general economic conditions prevailing during the periods covered by the performance information. Any references to future returns/risk are not promises of the actual return the client portfolio may achieve. Before investing, investors should seek financial advice regarding the appropriateness of investing in any securities of investment strategies discussed. Not all investments are suitable for all investors.