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Private Wealth Frequently Asked Questions (FAQ)

Frequently Asked Questions About Private Wealth Advisor Services

Investment Management

The goal of any investment includes financial gain, but some investment management decisions miss the mark — either gains fall short of expectations or losses occur instead. That possibility defines the risk in investment management. Investments that offer the highest potential gains tend to involve the greatest risk, also referred to as uncertainty or volatility. Investors who can absorb losses without hardship tend to be more tolerant of risk, while others prefer to avoid risk as much as possible. 

Managed investments, more typically called managed accounts or managed funds, represent investments or collections of investments supervised by one or more financial professionals hired by an individual or business entity. In this kind of investment management, professionals take on the legal responsibility and authority to act in the best interests of either a single investor or a group of investors. Managers may buy or sell assets without checking with clients first, but they usually issue regular reports to keep clients aware of how managed investments perform. A popular kind of managed investment is a mutual fund.

In the world of investment management, the term “portfolio” refers either to an array of investments owned by a single entity or to an array of investments administered by a single entity (known as bundled investment or managed funds). Regarding the former definition, a portfolio manager works as a financial professional who handles all of an individual’s investments, evaluating each purchase or sale with the client’s overall goals in mind. By contrast, an investment fund manager handles investments within the bundle on behalf of anyone who buys into the fund as a whole — potentially serving many clients with each transaction but without customization.

Wealth management refers to a more comprehensive array of services — covering not only the purchase, monitoring and withdrawal of investments within a portfolio, but other aspects of a client’s financial dealings and overall financial health. In addition to investment management, wealth management for an individual might include retirement planning and the administration of trusts and estates to minimize taxes, whereas wealth management for a business might include the administration of 401(k), profit-sharing and pension plans.

By definition, investment management assumes responsibility for all strategic decisions made when researching, selecting, monitoring and trading a collection of financial holdings. The goal of investment management is meeting specified financial goals in accordance with the client’s ability and tolerance to assume risk. Investment management firms oversee short-term and long-term financial planning on behalf of a single client, such as an individual or business entity, or for a fund that sells a bundled array of investments to multiple clients. Collectively, an array of holdings or investments makes up a portfolio, which is why some clients refer to investment management as portfolio management.

Wealth management is a financial advisory service for individuals seeking assistance to manage and grow their wealth. Investment banking is a service that helps individuals and companies raise money and free up cash flow.

Investment management is the daily management of a financial portfolio. Investment banking is a service that helps individuals and companies raise money and free up cash flow. Investment banking can help increase a client’s liquidity. This process often involves performing financial analysis, portfolio allocation, equity research and buying and selling financial recommendations.

Investment banking is a broad set of financial services aimed at providing financial capital to businesses, facilitating mergers and acquisitions and helping shareholders of private companies to monetize or sell liquid ownership stakes. Asset management then provides the professional management of the liquidity created by business sale proceeds in constructing a portfolio of financial securities to meet specified financial objectives and income needs.

Asset management is a service to help individuals reach financial goals by directing their wealth and investments, including personal assets outside of traditional investment securities (house, car, etc.). Asset management is a holistic term of which investment management is a component. Investment management is the service of buying, selling and managing financial assets and other investments. These two services can help a client reach their investment goals within a projected timeframe.

Financial Planning

To prepare your business for future financial success, you must develop and maintain a financial plan. Financial planning for a business allows you to analyze your current financial status and measure growth. This plan will allow you to measure how well the company performed. Your business’s financial plan should also have room for variables such as economic fluctuations, employee growth and new business ventures.
For business banking: 
Establish clear goals. These will serve as the foundation of your business’s financial plan. This planning will include assessing current debts and liquidity, economic growth and market competition. All of these areas will factor into your financial planning. 
For personal banking: 
Establish clear goals and develop a retirement plan. Do you want to retire and move to a warmer climate? Do you want to pay off your house and carry no debt? Do you want to have enough money set aside to take an annual vacation during retirement? Answering these questions can help you lay the groundwork for how much you need to save or invest to prepare for retirement. 
When setting up a financial plan, you should design a strategy to meet your investment goals using the following methodology: 
  1. Create a budget. This will help lay a foundation to guide all future financial planning. 
  2. Ensure your financial plan accounts for all applicable taxes on your cash flow. 
  3. Set aside money for an emergency fund. Reserve money for emergencies that could arise before and during retirement. This could help cover car repairs, home maintenance and medical treatment.
  4. Invest beyond your 401(k). Set aside a separate banking account for savings. Consider a Roth IRA. 
  5. Manage your debt so you can retire debt-free., so that upon retirement you are starting with a clean balance.
Financial planning helps you determine your short- and long-term financial goals and create a balanced plan to meet those goals. 
The first step in developing a financial plan is to determine your short- and long-term goals. Before finalizing these goals, you will need to assess your current income, debt and emergency fund. After assessing these items, you can adjust where your assets are divided in order to plan for retirement.
The components of a financial plan include a retirement strategy, risk management plan, estate plan and long-term investment plan including 401(k) and IRA.
Financial planning helps you map out your financial future. It empowers you to establish goals and stick to them. Building a financial plan can simplify the process of making investment decisions that could grow your wealth. As you advance in your career, you may feel compelled to contribute more to your 401(k) or IRA to prepare for retirement, although financial planning isn’t limited to retirement. Financial planning can also help you pay down debt and save on interest fees. 
In order to create a successful financial plan, you need to identify specific goals. These goals should include detail and strategy for reaching them. Use the following process to build your financial plan:
  1. Pay off debt. Completely pay off all credit card or hospital debt. This will free up money to place in your emergency fund. 
  2. Create a plan for investment. It should include planning for your 401(k), IRA and any separate accounts that can help build savings.  
  3. Create a retirement plan. Identify how you want to live in retirement. Include budgeting for travel and other bucket-list goals, along with other expenses like health care and emergency costs. 
  4. Develop your tax plan. Figure out how you plan to pay for taxes on the money accrued in your 401(k) and IRA. Planning ahead on this can ensure you don’t have any large lump sum bills due as you enter retirement. 
  5. Create a plan for your home. Allocate money so that your home mortgage is completely paid off by the time you retire. Ensure you have money set aside for any home repairs, property taxes and other maintenance and ownership costs.
The term financial planning defines the process of determining financial needs and goals for the future, with a plan for how best to accomplish them. Financial planning involves finding the most appropriate investments and other wealth management activities, while gauging economic circumstances and adjusting the plan strategy in accordance with major life changes, such as illness or market disturbances. Financial planning should encompass a combination of short-, immediate- and long-term goals.
Wealth management differs from financial planning in terms of the scope of money management offered and the average net worth of clients, although many services overlap. Wealth management advisors typically serve clients with a higher net worth who hold complex investments, such as trust funds and diverse stock portfolios. Financial planning focuses on basic investment strategies, such as a retirement plan and personal budgeting, to cover future expenses like health care and life insurance.
Financial planning is important because it helps you effectively manage income and investments to build wealth and meet future financial goals. The financial planning process involves evaluating current spending, recurring income and investments, and takes into account how much money you’ll need to cover future expenses and inflation. Financial planning aims to provide financial security through calculated money management strategies and acts as a guide to meet prospective goals.
The key step in financial planning is creating a financial plan that outlines your goals and strategic investment strategies to ensure future financial security. To create a financial plan, evaluate current assets and debt, set specific goals, and decide how to redirect current spending toward reaching those goals, such as investing and budgeting. Also account for the future costs of insurance premiums, taxes and retirement, and set up a dedicated savings or emergency fund. A Certified Financial Planner (CFP) can assist in creating and maintaining your financial plan, so you stay on track as life circumstances change your financial situation over time.
Making a financial plan is the cornerstone of financial planning, as it creates the foundation for future success. Set well-defined fiscal goals and prioritize them. A financial plan should include a diverse array of short-term and long-term investments, if you’re serious about building wealth. Also include a debt payoff strategy in your financial planning, and establish a savings method for building an emergency fund to avoid a financial crisis.
The first step in financial planning is securing a Certified Financial Planner (CFP) to help determine your financial net worth and financial goals. From there, a financial advisor works with you to create a plan of action to meet your future monetary needs and identify steps you should take to address immediate financial concerns, such as high-interest debt. A financial planner can also help you establish a monthly budget that tracks expenses, savings, spending habits and income.
Financial planning involves assessing current pay and assets, then determining future financial needs and figuring out the best investment approach to accomplish financial goals. Financial planning for individuals and organizations entails evaluating the most appropriate investments based on risk tolerance and timeframe, while gauging economic circumstances that may impact those investments. Main aspects of financial planning include retirement planning, long-term investment management, risk management, personal trust and estate planning.
By definition, financial planning involves evaluating current pay and assets, then determining the future financial needs and goals for a person, family or organization. Through financial planning, you make strategic decisions on how to meet those financial goals and project the results of the decisions. A financial plan can focus on the short term, which offers a higher degree of certainty than long-term plans that must account for market fluctuations. Solid financial planning aims to meet a combination of short-, intermediate- and long-term goals.  

Private Banking

The private banking relationship offered to qualifying clients extends a multitude of exclusive benefits. Private banking clients receive dedicated financial guidance and expertise for their overall personal balance sheet, exclusive cash management products, customized financing solutions and specialized mortgage options.

Private banking clients receive specialized portfolio mortgages to finance home purchases. Private bankers work in conjunction with mortgage experts to assist prospective home buyers and evaluate how a real estate purchase fits within their overall wealth management goals. This private banking and mortgage officer team also helps clients gain access to competitive financing options and provides insights to streamline the mortgage application process.
By definition, private banking is a personalized service typically limited to individuals of verified high net worth and/or personal cash flow who require specialized banking services, including depository and custom lending solutions. Commercial banking serves a much wider clientele and provides services and solutions to business clients.
Private banking defines an array of personalized financial resources, banking services and benefits available exclusively to individuals of verified high net worth and personal cash flow. Private banking services vary by financial institution but often include custom lending solutions and personal cash management, accessed through a dedicated private banker.
Private banking is an advisory and execution service for high net worth individuals seeking tailored depository and financing solutions. Wealth management, by comparison, provides advice and execution of investments for clients. Clients can access wealth management services at First Merchants regardless of their net worth.
Private banking provides affluent individuals and families access to exclusive financial services with preferred interest rates. Private banking clients receive customized, long-term, personal attention from their private banker as they establish, pursue and modify financial goals and strategies. This holistic approach offers direct access to tailored financial guidance through a single point person for banking solutions in personal cash management and specialty lending options.