Although financial planning and wealth management are integral sections of financial management and related to money matters, however, they differentiate from each other significantly. Scott Tominaga is a recognized professional with a specialization in the area of financial and wealth management. Throughout his career, he has served in different industries such as stock trading, personal financing, banking, business finance, and so on. According to him knowing the differences between them is vital as it helps individuals in choosing the exact professional services to promote their financial life.
What exactly is Financial Planning?
Financial Planning is basically a step-by-step procedure developed to match an individual’s finances and financial goals. This involves managing expenditures to save and invest in different investment options. Precisely, this is a long-term process to reach their financial objectives.
Financial Planning involves different activities such as cash flow management, debt management, risk management, developing emergency find, and so on. Equally, it focuses on investing in different financial products such as mutual funds, life insurance, health insurance, tax-saving schemes, etc. It also helps in planning future goals such as education, buying a car, marriage, buying a home, retirement, and obviously tax planning.
What exactly is Wealth Management?
Wealth management refers to the procedure of retaining wealth and equally growing its quantum in the long term. In general, wealth management is chiefly adopted by businessmen, affluent families, and individuals, celebrities, semi-mid or high-net-worth individuals. Precisely, wealth management is designed for a specific niche and involves expert advisory specialized in wealth management who help in generating custom strategies by using different financial instruments and services. This helps in preserving wealth, growing as well as amassing more wealth by using prevailing assets.
Wealth management activities comprise categorizing and leveraging money-spinning activities, assessment of capital gains, estate planning, tax management, and risk management. Some of the financial products it uses include mutual funds, bonds, equities, real estate, gold, etc.
Key differences between Financial Planning and Wealth Management
Applicable Segment
Financial planning is designed for every individual that also includes non-HNIs and HNIs. However, wealth management is specially meant for wealthy people who possess a sufficient amount of assets and wealth. Financial planning aims to save hard-earned money and invest them to reach an individual’s financial goals in life. On the contrary, the aim of wealth management is to multiply one’s existing wealth and equally preserve them. Precisely, while financial management is goal-oriented, wealth management is opportunity-oriented.
Objective
According to Scott Tominaga, a financial advisor helps manage income and utilize them through saving and investment to help people achieve their life goals. On the other hand, a professional focused on wealth management shows the roadmap to manage and preserve one’s existing wealth and grow its amount by investing in various financial instruments and investment opportunities.
Client Participation
Financial Planning may or may not require any active involvement of an individual. Precisely, a financial planner takes the responsibility to design a plan that suits one’s financial status and objectives. However, wealth management needs the active involvement of the client with the wealth manager in order to optimize their investment decisions to retain and grow their wealth in due course of time.
