Wealth Management Strategies

Wealth management is the application of knowledge, processes, services and products designed to help you grow, protect, spend and distribute your wealth to others. Managing and preserving your wealth is best done by qualified financial professionals — with expertise in retirement planning, tax planning, investment management, insurance optimization, estate planning and philanthropic program implementation.

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  • Written By
    Thomas J. Brock, CFA®, CPA

    Thomas J. Brock, CFA®, CPA

    Expert Contributor

    Thomas Brock, CFA®, CPA, is a financial professional with over 20 years of experience in investments, corporate finance and accounting. He currently oversees the investment operation for a $4 billion super-regional insurance carrier.

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  • Edited By
    Savannah Hanson
    Savannah Hanson, financial editor for Annuity.org

    Savannah Hanson

    Senior Financial Editor

    Savannah Hanson is an accomplished writer, editor and content marketer. She joined Annuity.org as a financial editor in 2021 and uses her passion for educating readers on complex topics to guide visitors toward the path of financial literacy.

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  • Financially Reviewed By
    Toby Walters, CFA®
    Toby Walters

    Toby Walters, CFA®

    Chartered Financial Analyst and Paraplanner

    Toby Walters, CFA®, is a senior financial analyst with over 25 years of experience in financial research. His knowledge spans researching and analyzing financial data to developing a one-of-a-kind viewpoint on money-related topics.

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  • Updated: May 25, 2023
  • 7 min read time
  • This page features 2 Cited Research Articles
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How to Cite Annuity.org's Article

APA Brock, T. J. (2023, May 25). Wealth Management Strategies. Annuity.org. Retrieved June 8, 2023, from https://www.annuity.org/personal-finance/wealth-management/strategies/

MLA Brock, Thomas J. "Wealth Management Strategies." Annuity.org, 25 May 2023, https://www.annuity.org/personal-finance/wealth-management/strategies/.

Chicago Brock, Thomas J. "Wealth Management Strategies." Annuity.org. Last modified May 25, 2023. https://www.annuity.org/personal-finance/wealth-management/strategies/.

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Key Takeaways

  • Wealth management is a holistic endeavor to grow, protect, spend and distribute your wealth to others.
  • Commonly employed wealth management strategies include reviewing your finances, diversifying your investment policy, optimizing insurance coverages, formulating an estate plan and implementing a philanthropic program.
  • You can implement wealth management strategies on your own, but very few people have the knowledge and resources to do so effectively. The more wealth you have, the more it makes sense to enlist a wealth management firm.

Set Goals for Your Wealth

Wealth management is all about understanding your financial situation and setting appropriate near- and long-term goals. For most people, this is a dynamic process.

In our younger years, it’s all about making ends meet, satisfying obligations and striving to save what we can. Then, as our earnings increase and the financial picture improves, the focus shifts to growing our savings for retirement. This usually entails assuming a relatively high degree of risk but, given the long pre-retirement investing horizon, it is completely sensible.

For those fortunate enough to accumulate sufficient money to live worry-free, a more conservative approach to investing becomes important. At this stage, wealth preservation becomes the focus.

Growing Wealth vs. Preserving Wealth

When thinking about wealth management, it is important to draw the distinction between growing wealth and preserving wealth. The latter entails a highly risk-averse approach to money management, while the former is more accepting of downside exposure in exchange for potential upside reward. Additional differentiating details are illustrated below.

Growing Wealth

  • Concentrated positions in a certain asset classes or assets
  • A high level of risk, with a heavy allocation of growth assets, including public and private equities
  • Theoretically, unlimited return potential, largely due to asset price appreciation
  • Active investment management, which entails regularly buying and selling assets based on perceived opportunities
  • Absence of a strict investment process, which facilitates flexibility and gut-instinct decision-making

Preserving Wealth

  • Highly diversified exposure across asset classes and assets
  • A low level of risk, with a heavy allocation of stable value products, including investment grade bonds
  • Limited return potential, with a long-run goal of exceeding the rate of inflation by a small margin
  • Passive investment management, which entails an emphasis on duplicating index performance in a low-cost manner
  • Rigorous adherence to an investment process, which entails periodic rebalancing to a target asset allocation
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Clearly, the strategies for growing wealth run counter to preserving it. This is logical, and it largely reflects the risk-reward tradeoff, which says you can only hope to achieve a higher level of return by assuming a higher level of risk. Moreover, in order to ensure a low level of risk, you must sacrifice return potential.

Strategies To Preserve and Grow Your Wealth

As I’ve described, wealth management consists of growing wealth and preserving wealth. In most situations, these objectives are pursued chronologically. However, for some very wealthy individuals, the objectives can be pursued simultaneously.

That said, some wealth management strategies make sense for everyone. The most prominent maneuvers are described below.

Review Your Finances

Get a clear picture of your finances by establishing a detailed inventory of all your assets and liabilities. As part of this exercise, assess your monthly cash inflows and outflows and implement a budget to guide your spending and savings habits. No matter how much wealth you have accumulated, a budget is a sensible tool that encourages financial discipline.

For some, the financial review process may lead them to implement a debt management program. A debt management plan can help you combat the wealth-eroding impact of excessive debt in a proactive, methodical way.

Regardless of your situation, reviewing your finances is essential to gain a foundational understanding of your financial health and facilitate sound decision-making in other areas of your wealth management program. A wealth manager can help you implement a sensible budgeting framework and ensure you adopt a periodic review.

Diversify Your Investment Policy

Another strategy for wealth management involves a holistic assessment of your investment holdings to ensure your portfolio is appropriately structured — with adequate diversification across and within asset classes. This entails revisiting your income and return objectives and tolerance for risk, along with any constraints relating to your time horizon, tax position, liquidity needs, legal situation and unique circumstances.

Ultimately, the process should keep you from having all your financial eggs in one basket, which reduces exposure to volatility and bolsters the resiliency of your portfolio. For most people, the appropriate level of diversification can be achieved via a mix of cash, real estate, publicly traded bonds and publicly traded stocks. For wealthier individuals, an array of alternative assets, such as private equity, private credit, commodities and hybrid securities, can be incorporated.

Consider Life Insurance and Long-term Care Insurance

Insurance is an integral part of a wealth management program. When properly structured, insurance policies can protect you and your loved ones from significant financial losses stemming from health, property and liability exposures.

Life insurance can also be beneficial, especially if you have a spouse or dependents that rely on your earned income and your estate is not large enough to provide for them indefinitely.

To preserve your wealth, you should also consider purchasing long-term care insurance. Without it, an unexpected illness can quickly deplete hard-earned savings due to the exorbitant cost of intensive care services and 24-hour care programs.

The tactics noted above pertain to wealth preservation, but tax-advantaged insurance products can also be used to grow wealth. These products include permanent life insurance policies and annuities.

Formulate an Estate Plan 

An estate plan is essentially a playbook that outlines who will eventually receive your assets, when they will receive them and how you want your affairs to be handled in the event you become incapacitated and are unable to handle them on your own.

Estate planning is a complicated process that involves many multifaceted components, including gift-giving strategies, tax-advantaged life insurance vehicles, trusts, wills and a variety of other legal documents specifying your authorizations and directives.

Handling all of this in a thoughtful, tax-aware fashion can make a huge difference when it comes to preserving your wealth for future generations.

Implement a Formal Philanthropic Program

If you have addressed the previously discussed concerns and are confident that your assets are more than adequate, you may consider implementing a formal philanthropic program. Another method of preserving wealth, a philanthropic program enables you to reduce your tax burden and make a positive impact in the world.

There are many ways to structure your program. One of the most straightforward approaches is to make your donations via a donor-advised fund. Essentially, this is a charitable investment account that receives your irrevocable contributions, invests them in a tax-free manner and allows you to grant them to handpicked charities over time.

When Should You Work with a Wealth Manager?

You could implement each of the above strategies on your own, but that doesn’t mean you should. Very few people have the knowledge and resources to implement wealth management solutions effectively. Retirement planning, tax planning, investment management, insurance optimization, estate planning and philanthropic program implementation are complex activities that usually call for guidance from a team of skilled professionals.

Unfortunately, assembling such a team is a very difficult and expensive undertaking.  Moreover, it can result in contradictory actions, lost opportunities and other costly inefficiencies if done in a one-off fashion. 

This is where professional wealth management firms come into play. The best firms have expertise across a range of wealth management needs, and they implement client-specific solutions in a highly integrated fashion. Oftentimes, wealth management firms characterize their all-in-one programs as private asset wealth management.

If you have a substantial net worth, you should strongly consider working with one of these firms. In the United States, there are thousands of reputable wealth management firms, both private and public. The larger, well-known public offerings include UBS Global Wealth Management, Goldman Sachs Private Wealth Management, Credit Suisse, Morgan Stanley Wealth Management and Bank of America Global Wealth and Investment Management.


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Last Modified: May 25, 2023

2 Cited Research Articles

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  1. Investor.gov. (n.d.). Risk and Return. Retrieved from https://www.investor.gov/additional-resources/information/youth/teachers-classroom-resources/risk-and-return
  2. Lawinsider.com. (n.d.). Family Office Definition. Retrieved from https://www.lawinsider.com/dictionary/family-office