Managing your wealth can be a daunting task, especially for the affluent. As your assets grow, so does their financial complexity, sometimes requiring even more sophisticated wealth management strategies. That’s why many high-net-worth individuals in the Minneapolis area choose to work with financial advisors.
For example, they leverage the advantages of tax-savvy professional portfolio management. This helps them minimize their tax liabilities by leveraging efficient investment strategies, with the goal of lowering their overall tax liabilities over the long term.
Partnering with a local financial advisor can provide many other benefits, as well. These often include solutions addressing your needs and wealth goals, personalized attention, and assistance navigating today’s complex financial landscape.
These topics are discussed in more detail in this article:
At its core, wealth management is managing an individual’s or family’s financial resources to pursue their short-term and long-term financial goals. This process involves various financial services such as investment management, tax planning, retirement planning, and estate planning.
The first step is developing a comprehensive financial plan. This should include your short-term and long-term financial goals, a budget, and a timeline for achieving these objectives. Your plan should also consider inflation, taxes, and risk tolerance factors. Once developed, it should be reviewed and updated regularly to ensure it remains relevant.
Investing in a diversified portfolio can help manage your risk and potentially, maximize your returns. This can include the use of asset classes such as stocks, bonds, real estate, and alternative investments. Your portfolio should always be based on your risk tolerance and personal financial goals. Similarly, it should be reviewed on a regular basis, and rebalanced when necessary.
Tax planning is another essential part of wealth management. Even the financially independent should explore tax-liability-lowering investment strategies such as retirement accounts, tax-deferred annuities, and municipal bonds. Tax-loss harvesting is another strategy to help reduce taxes by offsetting capital gains with losses.
Asset protection can be an especially important component of wealth management. The obvious solutions include insurance policies like life insurance, disability insurance, and long-term care insurance. Meanwhile, trusts are another asset protection strategy that can help protect your assets from creditors and lawsuits.
Retirement planning is an equally critical component of strategizing your finances. Retirement accounts such as 401(k)s and IRAs can help you save for retirement while reducing your current taxes at the same time.
It’s important to note that High Net Worth Individuals (HNWI) have different financial planning needs than standard wealth management often provides. Because you have a significant amount of assets, you have more at stake.
You also need specialized insurance policies, estate planning, and philanthropic planning.
Additionally, HNWI financial planning may focus on legacy planning to help ensure that your wealth is properly passed down to future generations.
Investing can be a complex process, especially if you have significant wealth. Without proper guidance and experience, navigating the volatility of today’s financial markets can be challenging. This is where professional portfolio management comes in.
Professional wealth managers are typically a team of experienced and knowledgeable professionals who help you pursue your goals as an investor. As mentioned earlier, they can help you diversify your investment portfolio by spreading your equity across different asset classes, industries, and regions. This typically reduces the risks associated with market volatility and economic downturns.
If you are an accredited investor, your wealth management team may recommend additional types of alternative assets for your portfolio management that can help to diversify your portfolio. Many Minnesota financial advisors have access to various types of alternative fund managers such as hedge funds, private equity, venture capital, and real estate.
As your wealth expands, so does the need for enhanced tax planning. There are many considerations to remember, including current tax laws, investment strategies, and retirement planning. If that seems like many plates to juggle, it sometimes is.
To begin with, you need to be aware of the various tax brackets and tax rates that apply to different income levels each tax year. These vary by income level, so structuring your income in a way that falls into lower tax brackets can help reduce your overall tax liability. Your wealth manager might, for instance, strategically choose investments such as municipal bonds for this purpose.
Your investments also play a significant role in tax planning strategies. Assets such as stocks and mutual funds can be subject to capital gains taxes when sold for a profit. However, investments in tax-deferred accounts, such as 401(k)s and IRAs, can defer taxes until withdrawal. Your investment losses can be leveraged to offset gains, as well.
Retirement planning is another part of the larger tax-reducing picture. By properly structuring your retirement accounts, it’s possible to minimize your tax liability during your working years and in retirement. Charitable contributions can factor in, as well. Estate planning is also a crucial part because the estate tax can be significant.
The short answer to the headline above is that there are multiple reasons why a Minnesota wealth manager is preferable to a do-it-yourself or robo-advisor approach. For example, a local financial professional should have a deep understanding of the local market and economic conditions.
He or she can provide valuable insights into investment opportunities specific to the Minneapolis area. This knowledge can be especially important if you are doing any form of commercial real estate investing, as the local market conditions vary greatly from other parts of the country.
Ultimately, collaborating with a local asset manager such as ViaWealth can effectively streamline your financial life in its entirety. This entails looking beyond merely tax benefits for your business or personal philanthropic pursuits. We strive to adopt a holistic, 360-degree perspective of your financial situation, helping you to pursue your financial objectives through clear, friendly communication and strategic insights.
ViaWealth, LLC is a Registered Investment Adviser. Information in this article is for educational purposes only and is not intended to be an offer or solicitation for the sale or purchase of any specific securities or other types of investments. Investing in the securities markets involve risk of principal and unless otherwise stated, returns are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before making any financial decisions. Past performance is not indicative of future performance.