The Art of Wealth Strategy

Creating an optimal wealth strategy is in some ways like creating a piece of art.

January 31, 2017 | Insight

Art, in itself, is an attempt to bring order out of chaos
– Stephen Sondheim

Art in its visual form is a very personal experience. A painting may bring serenity to one person, but confusion to another. Managing your personal finances is also a very personal business. There is a lot of advice being offered on the topic of personal finance that can seem contradictory and often times confusing. Whereas in the art world, no one painting will appeal to everyone, not even the Mona Lisa, there is no universal financial advice that applies to everyone, except perhaps to spend less than you earn.

Why are we comparing wealth management, something considered dry and technical to something so creative? Well, because creating an optimal wealth strategy is in some ways like creating a piece of art. There are technical skills and supplies needed to execute properly, but it is the vision and planning that creates success.

What does it mean to be strategic in your wealth planning? Building wealth is about more than just money; it means making sure you get the most out of what you enjoy. Having a wealth strategy is knowing where you want to go, how to get there, making sure it is done in a tax efficient manner and that the details are handled in the way you want. Money is a means to an end and your strategy should include the major parts of your life: work, lifestyle, family and community. Proper wealth management encompasses the big picture, while financial planning tactics are just one part of it.

Genova’s focus on tax efficient wealth and portfolio management sees us advising clients on how to best build their wealth and accomplish their goals. An important part of a wealth strategy, especially for those who are still accumulating their wealth, is to have two streams of wealth creation: 1) the wealth created from career efforts ; and 2) the wealth created from investing in other businesses. A lot of attention is is paid to investing – how and where to invest. To have a good long-term plan however, there are a few things to do before you start investing in that second stream:

  1. Define your goals and where you want to go. While this may change over time and with changing life events, be specific as you can at any point in time. This aspect is important for financial planning, estate planning and portfolio design.
  2. Make sure you have short-term savings, cash holdings usually held in a bank account. This is what you will use in case of emergency or for something you are saving for and plan to purchase in the near future (renovation, kids camp fees, travel etc.)
  3. Know your personal cash flow. How much do you need to live your life and where does it come from? This is a key point in financial planning.
  4. Pay down your non-mortgage, non-investment-related debt. This debt typically is not growing your wealth, restricts your options and is not tax efficient.
  5. Understand the basics and hire experts where needed. With so many different parts to a wealth strategy you will need to understand the basics in order to know what you are comfortable doing, when to hire experts and what to ask them before you hire them. Remember that although they are experts, they work for you. Make sure you know what they do, what they don’t do, and you feel like you are getting value for the fees you pay.

These are the tools to build your wealth and your lifestyle vision. Creating a wealth strategy is a big process, but knowing everything is in order and having peace of mind is well worth it. There is no paint-by-number solution to designing your financial security.

If you would like to talk about your strategic wealth plan, we would love to chat.