Manage your wealth, even if you're not rich
by Elvin Knight and Lisa Veselich
Many people mistakenly believe that the terms “wealthy” and “rich” are synonymous. However, in the context of wealth management, a person may have a need for wealth management services even if they may not otherwise be considered “rich” by social standards.
Unfortunately, many retiring people who have neglected the management of their wealth during most of their financially productive years are now faced with the harsh reality that their current financial situation will not be sufficient to sustain their lifestyle throughout retirement. Therefore, it is essential for individuals to address their financial planning needs early so they will have an opportunity to develop an investment plan that will ultimately meet their financial and personal goals.
Before embarking on an investment plan with a financial advisor, you should develop a net worth statement, which includes a detailed listing of all of your assets and liabilities. In conjunction with the net worth statement, a budget of anticipated income and expenses should be prepared. The budget is used to project your present and future cash flow needs from investments.
The next step will be selecting an advisor to help create and ultimately implement an investment plan. There are a variety of wealth management services available, ranging from basic financial planning at one end to a full service family office that provides a myriad of services such as bill payment, income tax preparation, legal services and investment advisory services at the other end.
Prior to any interview of a financial advisor you need to be prepared with specific questions to ask, including the following:
• What experience does the advisor have?
• How long has the advisor been with the company?
• How long has the company been in business?
• Does the advisor have any special qualifications, licenses and/or certifications in this area?
• Does the advisor select individual securities
or use outside managers or mutual funds?
• Is the advisor limited to certain products or vendors?
• Who would be working on your account?
• Can the advisor give you a list of professional references?
If you are interviewing a portfolio manager or registered investment advisor, you should be prepared to ask very specific questions regarding their investment style and philosophy. It will be important to periodically monitor the holdings in your account to ensure that the advisor has stayed within his stated investment philosophy and style.
During the interview, you should also ask the advisor to explain and provide you with written documentation as to the services to be provided and how the advisor will be paid. It is imperative that you have a clear understanding of what services you are paying for and how much these services will cost you.
Once you are satisfied with the qualifications, integrity and terms of the engagement with a particular advisor, the most important conversation you will have with your advisor is regarding your specific goals, financial objectives and risk tolerance. Defining the amount of risk you are willing to bear to achieve your goals and objectives will be critical. Generally, the shorter the investment time horizon you have available to achieve your goals, the less risk that you should be willing to bear. It will be up to your financial advisor to advise you whether your goals are attainable given the level of risk you are willing to take. Your budget and your cash needs projection together with your goals and assessment of risk tolerance will be used to create a written investment plan for you.
It will be important for you to monitor your progress towards these goals and to verify that your advisor has stayed within the guidelines established in your written investment plan (especially risk tolerance). If sufficient progress has not been made towards the achievement of your goals or the advisor has exceeded the risk that you were willing to bear, then your concerns should be discussed with your advisor immediately. If you are not completely satisfied after your discussing your concerns with him, you should consider seeking advice from a new financial advisor. 
Elvin Knight and Lisa Veselich are lawyers practicing in the estate planning practice group at Blackwell Sanders Peper Martin LLC.
P | 816.983.8189
E | eknight@blackwellsanders.com
P | 816.983.8187
E | lveselich@blackwellsanders.com