What is Personal Wealth Management?

Osmand Vitez

Personal wealth management is a professional service individuals can use to help them make decisions about financial and retirement plans. Financial planners or advisors are the primary professionals who help individuals diversify money among several different investment vehicles that will provide wealth from passive income. Personal wealth management is quite popular, as these advisors can help plan investments, offer tax services, and provide some legal or estate advice at one location, in a one-stop shopping type of environment.


Creating wealth often starts with personal financial planning. Prior to engaging the services of a licensed financial advisor, individuals need to create a personal budget for their income. This budget allows for an internal analysis of spending habits. Saving money is the first step of personal wealth management. While most individuals can complete this process on their own, financial planners may offer services that will help complete a budget or manage expenses. The cost for these services, however, may not be worth the benefits received.

Once the budget is in place, paying off debt is the next step in personal wealth management. Unnecessary debt includes credit cards or other consumer debt for small or non-essential products. Getting this non-essential debt paid off will leave more income for making investments or developing a financial plan for future retirement. Making debt payments while investing can result in more money being wasted on interest from consumer debt than interest earned from investments.

Individuals with a budget and limited debt expenditures are prime candidates for personal wealth management. Rather than leaving excess funds in a low-interest savings account, hiring a financial advisor will increase the opportunity for financial success. The first step is to discuss the amount of risk the individuals is willing to accept when investing. While all investments have some type of risk, some investments are inherently more risky than others. Historically, high-risk investments have higher returns. Constant fluctuation can result in individuals becoming uneasy about the investment and fearful of losing their principle. Financial advisors will often put together a risk management plan to diversify investments, mitigating a portion of investment risk.

Wealth management techniques also require a certain number of years to be effective. Younger individuals can have slower growing investments, as they have more time until retirement age. Older individuals will need riskier investments in order to maximize wealth creation. This age group may also need more legal or estate planning, as they typically have more assets or other personal items than younger folks who have not accumulated as much personal wealth.

Readers Also Love

Discuss this Article

Post your comments
Forgot password?