Understanding financial terms as an outsider can be daunting, especially if you are looking to delve into the industry. It starts with soliciting the services of a financial advisor, but even then they have various titles. In this article, we shall explore the difference between financial planning and investment management, also known as asset management or portfolio management. It is to provide knowledge that aids you research in acquiring the services you desire from the right person.
Financial Planning vs. Investment Management
Financial planning and investment management refer to the two kinds of services you can expect to get from a financial advisor. They are similar in that they are a means to an end, which is generating wealth. The first step to attaining your finance-related goals is to assess the state your finances are in relation to what your goals are. That then when a financial plan gets created. From it, you develop objectives and actionable points. They take various forms, such as what your savings plan will be and what your risk appetite is.
On the other hand, investment/asset/portfolio management has to do with how you will invest money. There are various options such as trading in securities, bonds, precious metals, and the kind. It also looks at where to channel your finances and make necessary adjustments. Financial advisors and firms vary regarding these aspects. Some advisors or entities will undertake only one role, while others take both. The best approach is working with a firm or person focusing on all aspects. It is cheaper, and there is continuity in the management style.
Knowing your needs
From the definition, it is evident you will require financial planning and investment management. How these parts manifest largely have to do with your age and economic status. A practical example is an ICBC lawyer Vancouver consults with age 28, and a senior manager in the same company who is 45 years. It is almost certain their priorities are different. The older one will focus more on retirement options. The younger one would perhaps be more interested in making enough for a mortgage.
Therefore, financial planning and investment management are one of those aspects of finance that don’t have a textbook approach for each party. If you have substantial wealth, you will also find that you need an extra set of hands and eyes managing them.
However, the essential guide given to those wishing to entrust their wealth to others for management purposes is to do their research. Check the people or company’s track record and countercheck with reviews and references. Wealth is a delicate matter and ought to be treated with utmost caution.
