Wealth management and financial planning are terms many individuals have heard before, but most people aren’t aware what differentiates the two from one another. The finance industry, social media, and magazines often use these terms interchangeably. For example, we are AAFMAA Wealth Management & Trust LLC (AWM&T) and we offer financial planning. So how are these terms related — and can they really be used interchangeably? Let’s dive deeper into the nuances of each of these services.
What is the difference between financial planning and wealth management?
To understand wealth management vs. financial planning , we first need to break down these terms and determine how the components and operations of each vary.
What is financial planning?
Financial planning serves as the foundation for your financial health and success. Financial planning applies project management skills to your personal financial life to help you reach certain financial goals.
For example, in the military, when you organize a mission, you start with objectives and plan the execution to achieve them, while considering the impact and possible factors that could change the execution or outcome. In our personal lives, we often handle projects the same way. — we start with a plan that has goals and timelines.
A financial plan helps define unique goals and objectives, while creating a strategy to accomplish those goals. Following a comprehensive evaluation of your financial goals and situation using currently-known variables, a financial plan generates projections that illustrate the paths your financial state could take in the future. These variables can include cash flow, asset values, withdrawal needs, net worth, tax liabilities, investment asset allocation, retirement plans, estate plans, and more. A financial plan also addresses steps you can take to increase the probability of your success down the road as these variables change.
When you consider making big changes in your life, a financial plan is instrumental in providing guidance on the impacts of those moves. When you transition out of the military, your medical coverage, life insurance, savings, housing, and budget may all change. If you change jobs, you may need to consider a 401(k) rollover, deferred income, and possible changes to life insurance and medical coverage.
What does retirement look like for you? Your retirement plans are unique, so it’s important to consider some of the natural risks that can impact your plans. Factors to consider include whether you will need long-term care. How will you plan for that? Will you purchase long-term care insurance or self-insure, and how will you protect and preserve your wealth?
All of these questions and more can be addressed by building a comprehensive, dynamic financial plan that helps you navigate the many changes you’ll experience throughout your life.
What is wealth management?
Wealth management can be considered the outcome of a well-executed financial plan. Successful financial planning leads to the accumulation of wealth over time, which at some point you may need assistance to manage effectively. It’s important to note that the idea of “wealth” is subjective — to one person, it may be $500,000; to another, it may be $25 million. Everyone has a distinct perspective and understanding of wealth. Therefore, managing wealth is unique to each individual.
Wealth management is the consultative process of using investment strategies to help meet your unique needs and wants by leveraging the appropriate financial tools and services. AWM&T serves as a fiduciary on every account. As a trustee, as an investment manager, and as a financial planner manager, we do not sell any products. Rather, we provide recommendations and a service to help you develop the right strategies for your specific needs.
Should I work with a wealth manager or a financial advisor?
Coming up with a game plan for your financial future can be overwhelming, so if you are wondering who to consult with in order to better manage your finances, consider a wealth manager or a financial advisor.
Wealth Manager vs. Financial Advisor: Which is best for me?
The term “financial advisor” is broad. It applies to an expert who helps clients with a wide range of financial services. Financial advisors can specialize in a number of financial services, so it’s important to review their certifications and licenses to better understand their area of expertise.
A “wealth manager” is a specific type of financial advisor that delivers advice on services such as investment management, financial planning, and guidance with the estate planning process. If you’re in need of assistance with these specific services, a wealth manager is best suited to meet your financial needs.
Chart Your Financial Future with AAFMAA Wealth Management & Trust.
Wealth management involves a coordinated team of experts to address your needs and wants. AWM&T’s highly qualified Relationship Managers coordinate with our financial planners, account administrators, trust administrators, and portfolio managers to provide you with a seamless experience.
Our business is focused around three core services — Financial Planning, Investment Management, and Trust Services. Specialized teams within AAFMAA Wealth Management & Trust dedicated to each of these services offer you expertise tailored to your unique circumstances.
We employ CERTIFIED FINANCIAL PLANNER professionals, Certified Trust and Financial Advisors, and Certified Wealth Strategist . Additionally, our staff designations include Chartered Financial Analysts and Certified Public Accountants. Our Relationship Managers coordinate all of this experience and knowledge to develop the right solutions and recommendations for you.
If you have any questions or concerns regarding your investment strategies, financial planning, trust planning requirements, or wealth management options, please do not hesitate to reach out to us. Email [email protected] or call 910-390-1933 to connect with one of our expert Relationship Managers today.