Proactive measures for wealth management

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Do you prefer health care or caring for the sick? The same can be considered for your assets.

We favor preventive measures in both categories – health and wealth. You’ve heard the term health care, but in many ways our system is geared towards those who are sick, providing care for the sick. Although this coin is more about wealth than health, the same principles apply.

Proactive wealth management and planning provides the same benefits as real healthcare.

How often do you proactively review your assets? Do you do it yourself? Are you going to a professional? What does this professional review do to determine if you are extending the life of your wealth or potentially harming its longevity?

There are many subsets of wealth management, and everyone may need to spend more or less time in one area depending on their unique situation. Investments tend to monopolize media attention. Quite rightly, these assets are what will likely help you survive retirement. But what about the 30 to 40 years of work before retirement? What are some healthy regiments of wealth-related “exercises” that we should be doing before heading through the golden years of retirement?

Deepen Wealth Management

What should you watch first? Believe it or not, when we think of health and wealth, they both come down to two things we do every day: eat and spend money. Therefore, this is exactly where you should start when thinking about how to improve results in either category.

For wealth management, start with expenses. Not only how much do you spend each month, but where do you spend and is it sustainable? What percentage of your income do you save and where? Expenses equal lifestyle. Keep that in mind.

What else should you review regularly? Here are the main areas of wealth management:

• Your current financial situation: net worth, income, expenses, debts

• Insurance planning – health, life, disability, long term care

• Investment management – asset allocation, asset location, diversification, real estate investment

• Retirement planning – 401K, IRA, Roth IRA, Roth conversions, strategic distribution

• Estate planning – will, living will, enduring power of attorney, trusts, beneficiaries

• Tax planning – How much do you pay to the government, now and in the future? Could you do this more efficiently? It’s usually a team effort between your CPA, your CFP, and your lawyer. There are probably many opportunities to create efficiencies. Every professional should look at your tax return through their lens and look for opportunities to help!

Why are these areas so important? We refer to them in silos, but they are anything but. Wealth management analyzes how these silos interact with each other over time. For the rest of this article, we’ll dive a little deeper into investment management.

Focus on investment management

The investment decisions made over time in a person’s asset management plan will affect the long-term health of their financial plan. First, we assume readers accept that over time a higher rate of return can be achieved by investing in the stock and bond markets than in a savings account. It is also accepted that we will experience market fluctuations over time. However, a strategically designed portfolio can optimize your results. Just as a medical team looks holistically at multiple health factors, a wealth management team regularly analyzes the areas mentioned above and makes recommendations to help clients achieve their goals.

Hedge funds and excessive risk

Sometimes we get questions about riskier investments such as hedge funds. Hedge funds are managed by pooling the client’s money into a single pot. They use various investment strategies to try to beat stock market returns. Some strategies may include margin investing (borrowed money) and trading esoteric assets. In some years, these funds can overtake traditional markets. How? ‘Or’ What? By taking more risks. With more risk, also comes the potential for outsized losses. Hedge funds can even cost up to 4 times the cost of traditional portfolio management and create unpredictability for a person’s retirement income plan. It is not an investment strategy used by our company.

Planning with Blue Rock Financial Group

Blue Rock Financial Group invests ethically and passionately in the short and long term financial health of its clients. We specialize in fee-based financial planning and investment management for business owners and individuals. As trustees, ensuring clients receive maximum value without being inundated with high and costly fees is our mission. Our philosophy is rooted in advice first, evidence-based investing.

Todd Roselle, CFP, ChFC is the founder of Blue Rock Financial Group, with offices in Rehoboth Beach and Wilmington. Blue Rock Financial Group has been providing businesses and individuals with comprehensive financial planning services since 2012. In addition to his financial planning, Roselle is the author of “Plan with Confidence – A Financial Planning Guidebook“, available on Amazon. To find out more, visit bluerockfg.com or call 302 PLANNER, 302-752-6637.


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