Difference Between Financial Planning and Wealth Management

What Is Financial Planning?

What Is Wealth Management?

What Are the Differences Between Financial Planning and Wealth Management?

Following are the key differences between financial planning and wealth management:

Parameter

Financial Planning

Wealth Management

Who Requires the Service

Financial planning is meant for middle and lower-middle-class individuals who require financial advice to meet their financial goals efficiently.

Affluent classes or individuals with high net worth mainly choose wealth management services.

Focus Area

Financial planning does not look at existing wealth and can be stated as goals-oriented financial management for individuals.

Wealth management focuses on existing wealth platforms to identify further investment and fund accumulation opportunities.

Specialised Management

Active participation of specialised professionals is not required in financial planning. The advisor is just enough to perform the homework and address your financial concerns.

Wealth management is a complex area that extends beyond financial management. Here, the full-fledged participation of specialised professionals like chartered accountants, lawyers, etc., is essential.

Coverage Area

Financial management encompasses cash-flow management, investment planning, tax planning, retirement planning, etc.

Wealth management assesses wealth and risk tolerance, wealth preservation, asset allocation, etc.

What Are the Important Components of Financial Planning?

What Are the Important Components of Wealth Management?

FAQs about Financial Planning and Wealth Management

What is the ideal time for financial planning? up-arrow

There is no such ideal time for financial planning. However, as per the thumb rule, the earlier you plan, the better results you get. According to expert financial advisors, individuals should make proper financial planning just after earning.

Can I make my financial plan? up-arrow

Yes, you can do your financial planning by taking assistance from professionals. You need to include cash flow planning, tax planning, investment planning, and retirement planning while making an upright financial plan.

Do investment risks persist even after availing of wealth management services? up-arrow

Although a proficient wealth manager will make a customised portfolio based on risks, you still have to consider the uncertain nature of the market since they will never be completely invalid.

Which factors affect financial planning? up-arrow

Following is the list of factors affecting financial planning:

  • Social Welfare
  • Financial Literacy
  •  Financial Inclusion
  • Mastering Personal Finance