How Do You Manage Wealth?

For some, “wealth management” means managing money. For others, setting up estate planning. For still others, planning how to protect assets. There’s no right universal answer – but the answer for you dictates your entire investing and saving philosophy.

You can probably quickly name some 15 or 20 distinct areas of wealth management. To begin sorting out which apply to you, answer my favorite question of entrepreneurs’ coach Dan Sullivan: “If we were to get together five years from now, what would have had to happen in that time frame for you to feel that you … successful?”

The answer is a great place for you to start. If your answer hinges on financial independence and comfortable retirement, you go down one road. If instead your answer covers your children starting successful careers and possessing great money skills, you go down a different path.

Both paths are part of wealth management. Most times, you can’t go down both at the same time.

When I started as a financial planner, I gave clients a laundry list of dozens of items for attention. I never prioritized or worked with the client to choose the most important aspects of financial life to tackle first.

All this accomplished: paralysis in many of my clients. Nothing got done.

Avoid that mistake with your financial plan. Do one thing at a time: start saving for retirement and then college; begin building an emergency fund; open Google to research mortgages for first homes or competitive rates for life insurance. The first task you take on might not be the most important or the one that eventually makes the biggest impact in your life.

That’s okay. Most of the time you start working on total wealth management because only one aspect of your finances really bugs you. If you don’t take time to focus on that, you never get around to working on areas that might have bigger, longer-lasting impact.

Maybe you want that car before you start socking away for retirement. Maybe the trip to Europe comes before – both in terms of time and your priorities – beginning to save for a home. I call this scratching the itch.

Just make sure the itch goes away before you move on to bigger and likely more important areas of your financial life.

Next, move to the project that gives you the biggest result with the least effort – probably a large project with several parts. For example, if you want to build or improve your credit (itself an excellent first step toward building a secure financial life), you might apply for and then use credit cards, monitor your debt over months and check your credit report periodically.

Don’t try to do the whole project at once. Prioritize what’s the most important, complete that part and go to the next step. Narrowing your focus step by step will help; once you secure good credit, for instance, you can shop more efficiently for an appropriate and affordable mortgage.

If you decide comprehensive wealth management is for you, get at least one if not several outside advisors. Stay in charge of your plan. Advisors often suggest what they want to do in your situation.

In most instances, you want your advisors to simply help figure out how you get an outcome, not why you want it: a summer home you can afford, a South Seas trip in retirement, tuition for your children.

The financial plan is yours. Like the best managers in all walks of life, stay in control.

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Josh Patrick is a founding principal of Stage 2 Planning Partners in South Burlington, Vt. He contributes to the NY Times You’re the Boss blog and works with owners of privately held businesses helping them create business and personal value. You can learn more about his Objective Review process at his website.

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