What's the Difference? Wealth Management vs Financial Planning

When searching for a financial advisor, it’s common to hear the terms wealth management and financial planning used interchangeably. However, these are two distinctly different activities, and understanding the difference is critical to choosing the right financial advisor.

At our firm, we specialize in financial planning with a strategic emphasis on tax-first approaches, helping our clients—who are typically within 10 years of retirement and possess over $500,000 in investable assets—receive tailored advice that attempts to maximize their financial potential. Here’s how we differentiate between wealth management and financial planning and why our approach could be particularly beneficial for you.

Wealth Management: Singular Focused

Wealth managers come in all different types - but typically, they manage a portfolio of assets with dollars they’re given from investors. This means they could be a personal wealth manager or a wealth manager of a bank’s portfolio of products.

These individuals are solely focused on creating value through investing in the right assets and asset classes to grow a portfolio’s worth.

The upside is they are hyper-focused on making the right moves to grow the portfolio they oversee. However, it’s typically difficult to beat market returns, so some view pure wealth management as a commodity.

At Sherman Private Wealth, our philosophy on wealth management is designed to suit the needs of our clientele: individuals and families who have more than $500,000 in investable assets and are within 10 years of retirement.

Because these individuals are closer to retirement, they typically don’t require an extremely aggressive rate of return so we focus on capturing the upside of the market while attempting to preserve their portfolio if markets drop. This allows us to be better positioned to work towards producing a more consistent retirement income for them for the length of their retirement.

Financial Planning: Holistic & Comprehensive

So, how does wealth management differ from financial planning?

Well, for one, wealth management is just one aspect of financial planning. Financial planning is a much more holistic, comprehensive approach to the well being of our client’s finances. It starts with an evaluation of the client’s current financial status and then the systematic design of a long term strategy to meet their future needs. 

For Sherman Private Wealth, financial planning is a distinct, tax-first approach in 5 key areas:

1. Tax Planning - Because although most don’t realize this, taxes will be their biggest expense in retirement. We aim to plan in the long term to minimize our client’s lifetime tax liability.

2. Wealth & Investment Management - As mentioned above, we focus on capturing the upside of the market while preserving a client’s portfolio if markets drop. This allows us to produce a consistent retirement income for them for the length of their retirement.

3. Estate Planning - We take a thoughtful approach to plan for our clients and their heirs. We help to address the care they may need if incapacitated, the proper passing of their assets to your loved ones who carry on their legacy, and work to preserve their estate from state and federal inheritance taxes

4. Retirement Savings and Income Planning—Most people spend their entire lives receiving a paycheck, and then, in retirement, it stops. This can be concerning for some, but with the proper long-term retirement income plan, our goal is that there are always funds in our clients' bank accounts to allow them to live the life they’re accustomed to.

5. Social Security Planning - Our strategies for social security are unique for each client but each of the plans work in tandem with their tax planning strategy and include recommendations on when to consider taking advantage of their social security benefits.

Why a Tax-First Approach Matters

Our tax-first approach to financial planning is distinct and particularly beneficial for our client base of soon-to-be retirees. By focusing on tax implications upfront, we help our clients avoid common pitfalls that could lead to higher taxes or missed opportunities for saving.

This tax-centric approach not only helps work towards the goal of efficient wealth accumulation but also the pursuit of maintaining a comfortable lifestyle in retirement without the worry of outliving one's resources.

Ensuring a Holistic Approach to Your Financial Wealth

While both wealth management and financial planning are essential to securing a financial future, they cater to different needs. Our approach is holistic and meant to set clients up for long-term success and financial health using the 5 key areas mentioned above.

Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC

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