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When asked about the definition of wealth, people are likely to give a response that involves stocks and bonds. As financial advisors, we know that wealth goes far beyond dollars and cents. In order to provide excellent service to our clients, we must acknowledge this and embrace “true wealth management” in our practice.

The most successful wealth managers focus on all the types of wealth, not just what their Bloomberg terminals display. This often includes an assessment of a wide range of non-financial aspects of wealth, such as family relationships, jealousy, fairness, personalities, openness and many other factors. These issues will have a great impact on your client and his/her family’s wealth and ultimate happiness than investments alone.

Wealth management professionals should do a great job with investments, while also assisting with the complex financial and non-financial issues that arise when life, family, money and business intersect over time. Remember that wealth management is not a one-time event, but it is an ongoing process that evolves over a lifetime, and sometimes, generations.

What is “true wealth management?”

Effective wealth management is composed of three critical, related pieces:

  • Investment management: managing investments to grow wealth.
  • Non-investment financial management: managing non-investment finances to enhance, protect and transfer assets.
  • Relationship management: (1) managing client, client family and wealth manager relationships and (2) managing the professional network of tax, legal & accounting advisors that are required to execute a comprehensive wealth management plan.

In the world of wealth management, both non-investment financial management and relationship management are talked about a lot in theory but are rarely executed in practice. Industry research shows that only 7% of financial advisors provide these critically important services. However, 100% of advisors should provide these services.