What is Wealth Management?

What is Wealth Management?

Wealth management can be more than just investment advice, as it can encompass all parts of a person’s financial life. The idea is that rather than trying to integrate pieces of advice and various products from different managers the client benefits from a holistic approach in which a single manager coordinates all the services needed to manage their money and plan for their own or their family’s current and future financial needs.

The concept of a wealth manager is based on the theory that he or she can provide services in any aspect of the financial field, while many mangers choose to specialize in particular areas. This would be based on the expertise of the wealth manager in question, or the primary focus of the business within which the wealth manager operates.

A wealth management advisor will coordinate input from outside financial experts such as the client’s own lawyers and, accountants, to create the best strategy to benefit the client. Some wealth managers also provide banking services or advice on philanthropic activities.

So, in short wealth management is an investment advisory service that combines other financial services to address the needs of a person’s financial life. Clients benefit from a holistic approach in which a single manager coordinates all the services needed to manage their money and plan for their own or their family’s current and future needs. This service is usually appropriate for individuals with an array of diverse needs.

Wealth managers may work as part of a small-scale business or as part of a larger firm, one generally associated with the finance industry. Depending on the business, wealth managers may function under different titles, like financial adviser. A client may receive services from a single designated wealth manager or may have access to members of a specified wealth management team.

The wealth manager starts by developing a plan that will maintain and increase a client’s wealth based on that individual’s financial situation, goals and comfort level of risk. After the plan is developed, the manager meets regularly with clients to update goals, review and rebalance the financial portfolio, and investigate whether additional services are needed, with the ultimate goal being to remain in the client’s service throughout their lifetime.

This brings us to financial security planning within Wealth Management

A sound financial security plan should protect you against uncontrollable events such as disabilities or death, while helping you plan for controllable events such as buying a new home and retiring comfortably. To do this, Henley Financial & Wealth Management planning process is based on four areas of financial security planning:

  • Financial security at death
  • Retirement
  • Liquidity
  • Disability and critical illness

Financial security at death

 All financial security plans start here because death is inevitable and an uncontrollable event. As part of the financial security planning process, we’ll discuss:

  • How much income will your family need if you die?
  • How will inflation affect this income?
  • How to preserve your estate for your family when you die

Retirement

 When we discuss retirement planning, we consider:

  • What kind of lifestyle do you see for yourself in retirement?
  • How much money will you need to retire comfortably?
  • What impact will inflation have on your income?
  • Would you like to have the freedom to slow down or retire early?

Time and planning are two factors that influence whether or not you accomplish your retirement goals. Therefore, you must work towards your retirement goals over time.

Liquidity

Liquidity is your ability to access cash or assets that are easily convertible to cash. Liquidity can be a short-term savings option that can regenerate over time and need your constant hard work.

Disability and critical illness

Mitigating your risk against uncontrollable events such as disability or critical illness is key to your financial security. When building your financial security plan, we’ll consider:

  • Will your income be reduced in the event of disability or critical illness?
  • If your income is reduced, will it be difficult for you to maintain your lifestyle and retirement savings?
  • How much disability or critical illness insurance coverage is enough?
  • What impact will inflation have on your income if you’re unable to work for a long time?
  • Do you know if your group benefits provide a provision to allow you to continue your retirement savings if you become disabled or suffer a critical condition or illness?

 

 

Screen Shot 2020-04-23 at 10.51.30 AM

What types of insurance are available?

What types of insurance are available?

Life insurance in the beginning was the benefit which was realized at the death of the policy holder. It was really “death insurance” which in today’s world would be a hard idea to sell. Today, the world of insurance has expanded to different types of insurance where you don’t have to die to win. While also providing benefits to the policy holders who are alive – a living benefit. Living benefit plans are insurance policies that provide financial benefits to survivors who face issues due to aging, illness, accidents and dependency.

Disability insurance

Disability insurance (sometimes referred to as DI) is an insurance policy that pays out a stream of monthly income in case you get disabled and cannot work. The injury or disability does not have to have happened at work but it must severe enough to prevent you from working and earning an income. Many people have both short-term disability and long-term disability coverage through work but you can buy personal disability policies if there is not coverage like in the case of some self-employed individuals.

 Health and dental coverage

Health and dental plans are often covered through group benefits. These plans are designed to help with the unexpected cost of healthcare needs when you need it. There is a growing concern that governments will have significant cut backs in the health care industry and as a result, the financial burden of prescription drugs, visits to the dentist, eye exams, and paramedical services may increase in the future. Individual Health and Dental insurance policies can also be purchased through insurance companies.

Travel insurance

Travel insurance is something you can buy when you travel outside of Canada in case you get sick or have an accident while you are away. Travel insurance can cover the cost of your medical emergencies. Travel insurance may or may not include trip cancellation coverage. Most travel agencies will offer travel insurance coverage. However, you can also choose to purchase from a third party. If you’re planning your trip online or on your own, you’ll have to research which insurance companies are best for your needs.

Critical illness insurance

Critical illness insurance is a type of insurance that helps you if you become critically ill. There are many different conditions that might be covered under a critical illness policy but the most common are heart attacks, strokes, and cancer. Typically, critical illness insurance provides a lump sum payment when a specific condition is diagnosed. The money can then be used for any purpose. Some examples include finding alternative medical treatments anywhere in the world, hiring a caregiver, paying debts, covering expenses that are not covered under government health care, paying for private nursing homes, or providing income support.

 Long term care insurance

Long-term care insurance is another coverage that is rapidly growing in popularity. It pays a daily or monthly benefit for medical or custodial care received in a nursing facility, in a hospital, or at home if you are unable to carry out some of the common activities of daily living (ADLs). Some examples include:
· Bathing
· Dressing and undressing
· Eating
· Transferring from bed to chair, and back
· Voluntarily controlling urinary and fecal discharge
· Using the toilet
· Walking (not bedridden)

Few people plan to get injured or ill. Getting insurance of any kind is a form of risk management . . . preparing for unfortunate circumstances in life. Be sure to include a review of living benefits when you review other types of insurance.

 

 

Why should I buy life insurance?

Why should I buy life insurance?

If this is a question you have been asking consider the following:

Life insurance can offer peace of mind, creating a payout that would cover your debts and or your family members financially in the event of you should die.

Would my death create a financial crisis for anyone?

Life insurance is an important consideration for anyone concerned about how their death might financially impact loved ones. Once you have a significant other, you should have life insurance coverage in place. If you have significant financial obligations such as a mortgage, car loan, and credit debt. Your surviving dependant can use life insurance to ensure that the debt is covered.

Parents benefit greatly from having life insurance so that if they die while their children are still dependents, the children are left with funds to live off, pay off debts, and post-secondary education financial needs. Life insurance can be used to ensure that all debt is covered and a post-secondary education can still be obtained without financial burden placed on your children.

The amount of coverage that is needed is determined by using either a Present Needs, or Future Needs process.

What does Present Needs mean?

The present needs process is a way of determining the appropriate amount of life insurance coverage an individual should purchase. This approach is based on the creation of a budget of expenses that will be incurred upon death, including funeral expenses, estate settlement costs, and replacement of a portion of future income to sustain the spouse or dependants.

What does Future Needs mean?

The future needs process contrasts with the present needs as the future needs process calculates the amount of life insurance a family will need. Based on the financial loss the family would incur if the insured person were to pass away today. The future needs usually take into account factors such as the insured individual’s age, gender, planned retirement age, occupation, annual wage, and employment benefits, as well as the personal and financial information of the spouse and any dependent children.

When calculating any expenses, it is best to overestimate all needs a little. For instance, consider any outstanding debts and obligations that should be covered, such as a mortgage or car payments. Also recognize that the need for income replacement may gradually decline as children living at home move away.

What is Term Insurance?

Term insurance is pure insurance protection that pays a predetermined sum if the insured dies during a specified period of time. On the death of the insured person, term insurance pays the face value of the policy to the named beneficiary. All premiums paid are used to cover the cost of insurance protection.

The term may be 10, or 20 years. But unless it’s renewed, the insurance coverage ends when the term of the policy expires. Since this is temporary insurance coverage, it is the least expensive type to acquire.

Here are the main characteristics of term insurance:

  • Temporary insurance protection
  • Low cost
  • No cash value
  • Usually renewable
  • Sometimes convertible to permanent life insurance

 

Term insurance pays a set amount if the insured passes away during a specific time period, and is considered to be “temporary” insurance, while permanent life insurance guarantees insurance for life, provided the premiums continue to be paid on time.

What is Permanent Life Insurance?

Permanent life insurance provides life time insurance protection (does not expire). Most permanent policies offer a savings or investment component combined with the insurance coverage. This component, in turn, causes premiums to be higher than those of term insurance. This savings portion of the policy allows the policy owner to build cash value within the policy which can be borrowed or distributed at some time in the future.

Here are the main characteristics of permanent life insurance:

  • Permanent insurance protection
  • More expensive to own
  • Builds cash value
  • Loans are permitted against the policy
  • Favorable tax treatment of policy earnings
  • Level premiums

The two most common are whole life and universal life. Whole life insurance provides lifetime protection—for which you pay a predetermined premium. Cash values usually have a minimum guaranteed rate of interest, the death benefit continues to grow allowing the cash value within the policy to grow tax exempt in the future.

Universal life insurance separates the investment and the death benefit portions. The investment choices available usually include some type of equity investments, which may make your cash value accumulate quicker but at the same time you are now more vulnerable against the markets in which you invest (because as the market fluctuate the value of cash fluctuates which is volatile risk). Over time, you can usually change your premiums and death benefits to suit your current budget.

Age, health, and whether or not the person seeking life insurance smokes all factor into the price of a policy.