What is wealth management?
Everywhere in the media these days you’ll find ads about wealth management. But what is it exactly? “It’s managing all aspects of a person’s assets,” says Robert Pouliot, lecturer on fiduciary risk at UQAM’s School of Management and researcher at the École de technologie supérieure. “That means the individual's property, savings, investments, but it can also be other assets that might define and characterize the way in which that person manages financial resources.”
According to this specialist, it’s important not to confuse wealth management with portfolio management. “There’s a big difference between the two,” he says. “In a portfolio, you’re looking strictly at the client’s financial assets and instruments, whereas with wealth management, you’re also considering the person’s properties, debts, tax situation… If you focus only on the client’s portfolio, you won’t be able to see the bigger picture…”
Financial planner Francis Sabourin is a portfolio manager and investment advisor with Richardson Wealth, a wealth management services firm. He points out that portfolio management is a component of wealth management. “We start with wealth management,” he explains. “That tells us where we’re going and helps us eliminate gaps in the client’s financial plan.”
Individuals and organizations that offer wealth management services work with a wide range of experts, both in-house and external, which makes them a sort of one-stop shop for clients. “Depending on the situation, we’ll reach out to a notary to have a will drawn up, or an accountant to have a tax return prepared,” says Francis Sabourin.
Who is it for? And why?
Not long ago, only people with assets of more than a million dollars would be considered for wealth management services – also referred to as private wealth management in cases where services are targeted to the very affluent with particularly complex situations. These days, however, wealth management is becoming more broadly accessible. “A growing number of firms of mutual fund representatives and advisors are moving in the direction of a wealth management firm,” says Robert Pouliot.
Do you still need a million dollars in order to access their services? It depends on the firm you contact. While some continue to require that level of wealth, others have different criteria for access. “We do customized wealth management, so for that you need a substantial amount,” says Francis Sabourin. “But we also look at growth potential over the long term and what stage the client is at in his or her life. An individual’s wealth evolves, you know. As time goes along, life changes. And often, it changes for the better. The important thing is to have some guidance along the way.”
That being said, not everyone needs wealth management services. According to Robert Pouliot, that would be the case for individuals whose wealth is under half a million dollars, including their home.
Francis Sabourin believes that it’s possible to manage your wealth yourself and achieve a good outcome. “There are videos online and some great Quebec-specific books that can help,” he says. “But you have to be a self-learner and put some time into it. For people who have a career, who have kids, that may be difficult, especially with the variety of products available and the tax considerations that have to be taken into account.”
Are there people for whom this type of service is not useful at all? “Anyone who won’t listen to advice,” says Francis Sabourin. “You have to take it seriously. Making a plan is great. But if you don't follow it, then it isn’t worth the paper it’s written on.”
So who do you call?
If you have access to and are interested in wealth management services, then according to Robert Pouliot, a financial planner will definitely be in the best position to review your situation as a whole and put you on the right track.
To make sure the financial planner you’re dealing with is properly licensed, you can check the Register of firms and individuals authorized to practice on the website of the Autorité des marchés financiers. Financial planners are multidisciplinary financial services professionals who are members of the Chambre de la sécurité financière. They have the training to do a comprehensive review of your overall financial situation, including investments, insurance, taxation, estate planning, retirement, finances, etc.