The Keys to Wealth Management Podcast


In this episode of the Science of Economic Freedom podcast, “The Keys to Wealth Management,” I discuss the seven critical components of wealth management that need to be measured, and that can therefore be improved, if you are serious about creating the financial life you desire.

Topics in this episode include:

  • The importance of defining and setting goals.
  • Asset accumulation and income streams.
  • Liabilities and using debt as a wealth management tool.
  • How to properly manage income and expenses.
  • How to think about, and manage, the inevitability of taxes.
  • Keeping investment strategy in perspective, and why it’s not as important as you might think.
  • How to employ proper risk management, and how to think about legacy planning.

Remember, achieving economic freedom isn’t easy. If it were, everyone could do it. To really get to where you want to be, or stay where you want to be, you need to fully understand and integrate the key concepts involved in proper wealth management, and that’s what this episode is all about.

Podcast Transcript Episode 21

What does real wealth management look like? Am I doing the right things right now to build my wealth and what is my biggest financial concern and what should I do about it? All this, on the current episode of The Science Of Economic Freedom. The Science Of Economic Freedom is intended as an investor education resource. The views and opinions expressed on this program should not be construed as a recommendation to buy, sell or hold any specific security. Consult your investment advisor and read any investment prospectus carefully before making any changes to your investment portfolio.

This program is sponsored by Mercer Advisors. Mercer Global Advisors Inc. is registered with the Securities and Exchange Commission and delivers all investment related services. Mercer Advisors Inc. is the parent company of Mercer Global Advisors Inc. and is not involved with investment services. Welcome to The Science Of Economic Freedom. I’m your host, Doug Fabian.

This podcast is all about helping you achieve your financial dreams. We call that economic freedom. This program is about your journey to achieve economic freedom for yourself and your loved ones. Today, we want to help you identify your next step on that journey. This is Episode 21, The Keys To Wealth Management. Before we get to today’s podcast, let me cover some housekeeping items.

Based on the feedback from listeners, we have started the following series here at The Science Of Economic Freedom, Economic Freedom for Business Owners and Retirement Readiness. We have added a separate podcast page for business owners to make navigation easier. We will be doing the same for retirement readiness. These are two subjects that require multiple podcasts to the specific issues of business owners and those near retirement we have also added a library podcast page making navigation easier and for you to be able to index podcasts by subjects.

Click on the Podcast tab on the nav bar to get to the library list. Now, we have also added a video on the home page of The Science Of Economic Freedom. Check it out. It’s what The Science Of Economic Freedom is all about. We will continue to tweak the website and listen to you, our audience, in determining what subjects you want us to cover. Thanks for all your feedback and keep the emails coming to [email protected]

Now, today’s topic is a big one, wealth management, the big picture. This is all about your role and responsibilities in managing all the financial issues in your life. Now there is a different set of circumstances for all of us but there are certain aspects of wealth management that are the same. For example, we all must deal with income taxes. For some of us, this may be simple, for others, this is extremely complicated. But taxes are universal. We must deal with them.

The purpose of this discussion of wealth management is finding your next step. Action is the key to success. We must constantly be seeking what to do next. Now, here are the key categories of wealth management. Assets, liabilities, income, expenses, taxes, investment strategy, risk management and legacy. Here is a famous quote from the business guru, Peter Drucker. What gets measured gets improved.”

Now, he said that more than 40 years ago but it is certainly still true today and it’s true relative to your wealth management. Planning and monitoring are keys to success. We need to plan and we need to monitor the plan as to the progress we expect and what we’re actually doing. It seems so simple but life just gets in the way. Now, in addition, we are all on a different time continuum. We are born and we die. These are the two bookends of our time continuum. We are all somewhere in between. Now, our family structure matters as well. Are we single, are we married, are we divorced? Kids or no kids? College, retirement, one income, two income, these elements are factors that impact our wealth management.

Now, we all want to do a good job with wealth management. Doing a bad job has serious downside consequences, so let’s do a good job. So, where do we even begin? Two places where thought and discussion come into play that will determine what you need to do next. First, where are you going? Where do you want to go? What are your goals? We’ve had these discussions before and I would refer you to Episode 4 and the special report on goal setting if you have not done this exercise already.

We must have a destination even if it is a general direction but the more detailed the goals, the better. The second place, and this is the place where most people seem to hang out, here is the question, what worries you about your finances? What are you afraid of? Here’s the question I ask at the beginning of every wealth coaching session, what is your biggest financial concern? Money worries are a big deal.

According to research from the American Psychological Association, some 62% of Americans are constantly stressed over money issues. This is even though the economy is steadily growing, unemployment is at all-time lows, consumer confidence is rising, balance sheets are healthy and financial markets are near all-time highs. Now, pause for a moment and reflect on your own financial situation. Are you experiencing stress over money? Where is the pain? Once we have identified the pain or we have our goals set, we can get back to the business of wealth management.

Now, let’s go back to the key categories of wealth. Let’s start with assets. We are all trying to build our assets to a level where we can live off the income stream that those assets produce. This is economic freedom. Building your assets should be a part of your long-term goals. If you have achieved economic freedom, great.

Now, let’s stay there and do what we are truly passionate about with our money. Next, liabilities. This is debt. Debt can be a tool to build wealth such as carrying a mortgage when you purchase a home but it can be a burden as well and this can be a major source of worry for some people. Income, this is a relatively simple concept. What is coming in monthly? Is this a source of worry or concern? Is this an area you want to improve?

Closely following income is expenses. Remember, one of the basic formulas of building wealth is cash flow. Income minus expenses equals cash flow. Is this area a concern for you? Next up, is taxes. We spent a ton of time on taxes this year. We have a new set of tax laws, a new set of rules. For most people, they worry about taxes once a year. I personally never worry about taxes because they are a major focus of my annual planning. I focus on them four times a year but what about you? Are taxes your issue? Let’s talk about investment strategy.

For some, this is a black hole. For others, this is not an issue at all. Some spend too much time trying to tweak or adjust their investment strategy. Others do nothing but worry about not having a strategy. Then there are those who have a well-researched strategy that is tailored to their risk and goals. This is where you should be. Your investment strategy will drive asset growth and income needs long-term. You should give this the attention it deserves.

Next up is risk. Risk is protecting what you cannot afford to lose. Now, we all have insurance for different risks and different reasons. Should you have liability insurance, of course. How about an umbrella policy, most likely, if you have assets of more than a million dollars. What about life insurance? It depends. Do you have others in your life that rely on your income? Risk is one of those categories that gets overlooked but once you have assets or others you’re responsible for, don’t risk not protecting them. And then finally, there is your legacy.

Another category that gets little attention and is not well-managed by many. Just completing a living trust is not enough. Your legacy must be managed. For example, the beneficiaries on your IRA accounts may change someday. Your trust may need to be updated because of a birth or a death in the family. Your assets will change over time. The purchase or sale of a business or real estate changes your balance sheet. The change in value of your assets may dictate a change in your estate plan. If your current estate plan is not in good order, this is a major issue that needs your attention.

Now, I have briefly covered eight key topics without mentioning the stock and bond market at all. So many hours are wasted focusing time and energy on the wrong issues. What happens in the capital markets is out of your control. What is in your control are the eight categories we covered today. Let’s go back to the quote from Peter Drucker, “What gets measured gets improved.” We all want to improve our finances. The same can be said about our health. Nobody wants to make their health worse or their money problems bigger, we want to improve. We want to make progress, we want to get better. We want less stress in our lives.

If you have a proper financial plan and are monitoring that plan, staying within these guidelines of the plan, money should not be a source of stress in your life. Now, let’s pull this all together and go back to our questions. Where do you want to go, what are my financial goals or what is causing me money worries? What is my greatest financial concern right now? Now, write down your answers to those questions and then, which of the eight categories do we need to address to get our plans together? What gets measured gets improved.

We have the content right here at The Science Of Economic Freedom to address these issues. For example, goal setting, this is Episode 4 and we have a special report under the resource section at the scienceofeconomicfreedom.com. Assets and liabilities, this is a discussion of your balance sheet. We cover that in Episode 5 and have a special report. Income and expenses equals your cash flow. This is Episode 6, we have a special report on spending and another special report, How to Give Yourself a Raise.

Taxes, we have a bonus episode, Prepare for Impact on the New Tax Laws. We have Episode 15, The Last of the Great American Tax Shelters. We have Episode 17, Only Pay Your Fair Share in Taxes. What about investment strategies? Review Episode 7, Episode 8, Episode 14 and Episode 20. Risk, Episode 11. Legacy, Episode 10 and Episode 19. Right here at the scienceofeconomicfreedom.com, are the answers to your questions and concerns. Use this free information to your advantage. Now, here are the action steps from this podcast.

Number one, write out your worries, concerns and goals. Number two, select the appropriate podcast to take the next steps. Every single podcast we do has action steps and I have included in the show notes, from this podcast today, a link to the library page at the scienceofeconomicfreedom.com. And then lastly, take action. Now, one action step that you could take is to send me an email. If this discussion today sparked a question, [email protected]. Also, if you need a wealth coaching session, send me an email, [email protected] This is Doug Fabian. Thanks so much for listening.

The Science of Economic Freedom is intended as an investor education resource. The views and opinions expressed on this program should not be construed as a recommendation to buy, sell or hold any specific security. Consult your investment advisor and read any investment prospectus carefully before making any changes to your investment portfolio.

This program is sponsored by Mercer Advisors. Mercer Global Advisors Inc. is registered with the Securities and Exchange Commission and delivers all investment related services. Mercer Advisors Inc. is the parent company of Mercer Global Advisors Inc. and is not involved with investment services.

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