Why a holistic plan is key for managing wealth
Working with a dedicated team of experts that take an integrated approach to managing wealth can help you and your family reach your long-term financial goals. A holistic wealth plan goes beyond typical financial planning and includes leveraging the expertise of wealth planners, tax and estate specialists and other professionals working together to create a custom plan. This may include cash-flow management, investment strategy, retirement planning, insurance and risk mitigation, business succession and multi-generational planning. Here is a helpful overview of the components and considerations that may be included in a wealth plan.
Cash-flow management
Cash-flow management is long-term, often involving multiple people and generations. Working with planners to understand this component of your planning can help you efficiently manage your wealth. They’ll work with you to gain an understanding of your assets, sources of income and spending in order to develop a plan suited to your needs. Cash-flow planning also involves looking at your lifestyle expenses and aspirational goals, including charitable giving. Once you have a comprehensive understanding of how your money moves, you’ll be able to manage other areas of your wealth plan as well, such as retirement, philanthropy and estate planning.
Wealth preservation
A key component of a holistic wealth plan is protecting and growing wealth over time, minimizing potential risks and uncertainties. This includes outlining your current financial situation, as well as short- and long-term goals. These goals may include sending your children or grandchildren to private school, giving a sum of money to family members or friends or ensuring that you have put aside enough money to retire on while leaving enough money to generate wealth for your heirs.
Tax planning
Proper tax planning is essential in managing and preserving your wealth. A wealth planner can work with you and your tax advisors to help optimize your tax strategy with the goal of minimizing the amount of taxes you pay during your lifetime and after your death. There are several strategies to consider that could have significant implications on your taxes, including income splitting, incorporation, trusts, gifting, and charitable donations, to name a few. Going through a wealth planning process can help identify the relevant strategies for you.
Risk management
Appropriate risk management means striking a balance between holding on to and growing your wealth. A prudent approach to risk management aims to minimize investment losses while identifying opportunities to grow your wealth through investments targeted to your goals and risk tolerance. Working with a wealth planner can help you identify your goals and your risk tolerance and create a diversified investment portfolio that balances preserving and growing wealth.
Multi-generational and legacy planning
Your wealth plan can also take a long-term perspective that includes considerations about how you wish to pass on your wealth to future generations. A wealth transfer plan aims to ensure tax-efficient legacy planning, and can include working with accountants, lawyers, estate planners and other experts. Working together, they will consider important estate planning matters such as having an up-to-date will, choosing an executor, drafting health care directives or a power of attorney and setting up a trust.
Legacy planning also can involve working with family members to make sure they understand your values and goals, so they can act as stewards of the legacy you’ve built. Clear planning, communication and education play an important role in ensuring family members know how to manage an inheritance or carry on a tradition of philanthropy. Your wealth planner can act as a trusted third party who helps set up the next generation for success.
Wealth planning is a long-term, ongoing process
Creating a holistic wealth plan with trusted professionals can help you preserve, manage, grow and transfer your wealth. It’s important to revisit your plan throughout your life, in particular after a significant life event such as a job change, an inheritance, selling or buying a home or a major change in financial goals. You can prepare for these changes by working closely with your wealth planner in a way that helps keep your plan aligned with your goals. Your wealth plan is created with your long-term goals in mind, but connecting with your planner on a regular basis can help make sure you stay on track.
Fidelity Private Wealth is a brand name for a business group within Fidelity Investments Canada ULC (FIC) providing private wealth management products and services. Not all services are offered by FIC. Custodial services are offered through Fidelity Canada Clearing ULC, an affiliate of FIC. For discretionary management services offered by Fidelity Private Wealth, FIC acts in its capacity as a portfolio manager.
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