Wealth management & preservation

What is wealth management and preservation, and why is it important for individuals and families?

This question and more gets answered in the 27th episode of the Sharing Knowledge Series. From how families can effectively pass wealth and good financial stewardship along to the next generation, to the role of philanthropy , host Kevin Vonderau, chief lending officer at Westfield Bank, discusses topics related to wealth management, investment strategies, taxation implications, and preserving generational wealth with guests Brad Knapp, president of Clearstead and Ken Morgan, chief operating officer at Clearstead Trust.

Investment products:

Are not FDIC insured
Are not bank guaranteed
May lose value
Are not a deposit
Are not insured by any federal or state government agency

Effective wealth management and preservation doesn’t happen automatically. Intentional strategies and planning are necessary to ensure that family wealth endures for generations to come - so what do you need to know about wealth management, and what do some of these strategies look like?

What is wealth management

According to Brad, wealth management is all about deferred consumption with a goal and plan to save a certain amount over time. This could come in the form of investing in retirement through a 401(k) or saving for a child’s education with a 529 plan.

There are also important distinctions between individual and generational wealth, Ken points out. Individual wealth involves personal consideration, such as someone having enough money to retire comfortably. Generational wealth, as the name implies, centers around optimizing for the future transfer of assets from one generation to the next.

Strategies for preserving generational wealth

Preserving generational wealth is often about financial optimization, but also family education, transparency, and communication. At Clearstead, clients are given a 360 assessment of their personal situation and goals to identify an effective roadmap. This includes looking at their balance sheets, their business earnings, estate plans, other investments, insurance, and more. If careful steps and planning aren’t put in place, significant generational wealth can be gone within a generation or two.

The sooner this planning starts, the better. And it’s also important to be intentional about ensuring the next generation is a good steward of wealth. By including and teaching your children at a young age about investment assets and charitable gifts that give back to the community, you can pass along both financial responsibility and values to the next generation. In addition to being a method for good stewardship, philanthropic efforts can offer tax benefits, but most importantly, a sense of purpose for a family.

“Hope is not a good plan”

Ken explains that it’s not enough to simply hope that your family’s wealth is preserved over generations, or to hope that your children will be good financial stewards. Ultimately, wealth management and preservation boils down to a few basic yet intentional steps that go beyond just hoping for the best: have a goal in mind, work with a team of professionals - including a trusted banker, lawyer, CPA, etc. - to develop a good plan, and revisit the plan often.

Sharing Knowledge Series Episode 27

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