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Wealth management is the most
profitable and fastest growing segment of the financial services
industry. It includes asset managers and private banking
institutions in the banking, capital markets and insurance
sectors. Wealth management is facing exciting challenges such as
globalization, consolidation, new competitors and
differentiation. Successfully meeting each challenge can result
in market growth for the informed competitor. Comprehensive
wealth management is personalized ideas for stock options,
income tax, portfolio, money managers, commercial property, and
estate tax. The basic method for management of money can be
broadly divided into four categories:
- Asset
Management
- Debt / Credit Management
- Tax / Legal Coordination
- Risk Management
Managing your wealth is about the day-to-day
control and use of your wealth. To manage your wealth
effectively and efficiently you need a complete overview of your
financial position, know what is happening to it, and have
ability to access and transact on it quickly and easily.
There are four steps and tips for effective self-wealth
management
Having a set record or report of your wealth position.
Reduce paper work
Effective transactions
Credit card usage
Let us now discuss the above in a detailed
fashion.
Having a set record or report of your wealth position.
At any point of time, you should be able to pinpoint your wealth
position. The Internet is a great tool to help you with
recording and reporting your wealth position. Internet banking
is one such powerful tool that allows steady and ready recording
of these very things. Your wealth position is not just a matter
of knowing your bank account balance, but tracking all of your
investments, including shares, managed funds and other assets
such as artworks, property, and cars.
Reduce paper work
Investing to increase wealth can generate a lot of paperwork.
Fund application forms, share certificates, and bank statements
should all to be neatly organized.
While maintaining good records is very
important, it's a smart move to reduce your paperwork wherever
possible. The Internet is helping many people do just that.
Using an online share broker, purchasing managed funds online
and Internet banking are some of the ways to reduce the
paperwork. When using an online share broker you do not need to
send share certificates to your broker when you sell your
shares. The transaction process is entirely online and
confirmation can be sent to you electronically.
Effective transactions
Investing
to increase wealth can mean that you end up with a number of
different accounts. You might have a day-to-day bank account,
home loan account, share account, credit cards, cash account and
more.
The ability to easily move funds between
these accounts can be important. In addition, using electronic
transactions such as ATMs and paying bills electronically can
reduce transaction fees and save you money. Connecting accounts
and electronic transactions enable you to make your wealth fully
work for you.
For example, you may wish to use funds that
you have set aside for a share purchase to reduce your mortgage
until you are ready for the share purchase. This means your
mortgage interest is minimized, and the bill is paid.
Using your credit card
Another strategy to assist wealth creation is to use your credit
card for your day-to-day purchases and bill payments. You then
pay the card off in full when due.
Cards that give you an interest-free period create the
opportunity to leave your money in a more effective interest
earning or reducing account, such as a home loan. If you have a
credit card that has a rewards program you will also earn reward
points.
Now that we have discussed how wealth can be managed, let us
see where this wealth can be invested to make it grow
effectively. For this, we first need to plan for wealth.
How can I plan for wealth?
Having a financial plan to increase wealth increases the chances
to ultimately receive that wealth. To be successful in this
field of financial planning, you will need a set document of
objectives. The main steps for financial planning are:
-Discovery - analyzing your current situation
-Setting objectives and goals
-Developing strategies
-Implementing the strategies
-Reviewing your performance
Discovery - analyzing your current situation
Certain
information needs to be collected about you, including:
Personal details
Financial position
Superannuating situation
Insurance, both current and required
Risk profile, what level of risk you are prepared to accept
Setting objectives and goals
Establish what your goals are. They may be short or long term.
Some common goals are:
Buying a home
Planning for retirement
Protecting lifestyle
Transferring wealth to future generations
Developing strategies
The financial planner will review alternatives available to you
using the various tools available to them. They might seek the
advice of specialist's in particular areas. The result will be a
financial plan to assist you achieves your goals. This may cover
the following areas:
Transacting - how to structure your finances to effectively use
your wealth
Borrowing - the structure of your loans and how they relate to
your investments
Investing - the areas and products in which you can invest
Protecting - how to protect and insure yourself and your assets
Implementing the strategies
With the assistance of the financial planner, you can implement
your plan. This may involve:
Purchasing and selling of investments
Restructuring of current loans
Restructuring of assets, such as superannuating
Purchasing insurance
Reviewing your performance The financial planner will
review your plan and situation periodically or when
circumstances change. This enables the identification of new
opportunities and checking of progress.
Types of
Insurance:
1. Life
Insurance
2. Home Insurance
3. Auto Insurance
4. Health Insurance
5. Disability Insurance
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