The act of developing a thorough plan to manage your finances with an emphasis on both short and long-term objectives is known as financial planning. A financial plan takes into account every facet of your financial status and seeks to maximize your assets in order to accomplish your goals. Financial planning aims to provide a financial management road map that takes into account both short-term demands and long-term goals. It usually takes a more comprehensive approach and isn't exclusively targeted at wealthy people. On the other hand, a more thorough and expansive method of managing high-net-worth clients' financial assets is known as wealth management. Designed for high-value portfolios, it is a specialist service that blends financial planning, investment strategies, and other services including estate, tax, and legal planning. Preserving and increasing the wealth of individuals or families is the aim of wealth management, which is frequently accomplished through specialized financial solutions and investment planning techniques. Both wealth management and financial planning, in spite of their distinctions, entail developing individualized money management plans and attending to a client's financial objectives. Particularly for high-net-worth customers, a wealth manager's services may include financial planning. Both need constant observation and modification to keep the plan in line with the client's changing objectives and financial status.

Your comprehensive financial plan should be reviewed every two years, with an annual check-in on the investment strategy. A yearly review guarantees that your financial plan remains on course, is in line with your present circumstances and adjusts as necessary. It's a chance to determine whether your objectives, spending plan, investments, and risk tolerance are still appropriate. One of the benefits of having a financial plan is that it’s a flexible process that can be updated anytime to reflect changes in your life. With that being said, there are opportunities that warrant an additional review. So what would be an example of that? The following major life events can trigger a review of financial life:

• An addition to the family 

• Purchase of a new home or property

• Change in your career (promotion, salary increase, new job)

• Loss of employment

• Marriage, divorce, or separation

• A shift in one’s health (illness, disability)

• Inheritance or death

• Resolving a significant debt 

• The purchase of a major asset (vehicle, boat)

• Substantial relocation 

In addition to these events, there are other occurrences that may result in a meeting with your financial planner. This can include the following financial services:

• You have noticed that your goals have changed as a result of different stages in your life, or you have completed your previous goals and are looking to set new ones. 

• A significant market change has occurred and it has impacted your portfolio.

• As you approach important financial milestones, such as attending post-secondary education, planning to retire, or paying off a large debt such as a mortgage.

An Innova financial advisor can work with you to update your financial plan and make sure you're on pace to meet your financial goals, whether you need to make adjustments or review your objectives.

When it comes to estate planning and generational wealth transfer, wealth managers are extremely important in assisting families with their financial future planning. The preservation of wealth, the reduction of taxes, and the achievement of family goals over generations are their main objectives. Strategic investment planning strategies, risk management, and tax planning are all incorporated into this approach, which places a high priority on everyone's financial well-being. By being proactive and planning in advance, the transfer of wealth can be seamless, rather than stressful. Understanding the family's dynamics and financial objectives is the first step in this process. This is where the wealth manager facilitates a discussion to determine the objectives, whether that be preserving the family’s legacy or finding a way to support the next generations’ financial stability. They will help with creating wills and trusts to control the distribution of wealth, reduce inheritance taxes through methods like charitable contributions, gifts, and trust accounts, and make sure that the assets are properly diversified for continued growth. Additionally, they educate heirs on how to handle the wealth they have acquired, assisting them in comprehending what they have inherited and how to best protect the family's possessions. As life circumstances change, your wealth manager will assist you in updating your plans to keep in line with the family’s objectives.

Monitoring financial metrics is a critical component of evaluating a client’s portfolio performance. These metrics provide valuable insights into how well the portfolio aligns with the client’s financial goals and risk tolerance. Total return is one of the most comprehensive indicators of financial performance, capturing interest income, dividends, and capital gains. It is calculated by comparing the original value of the investment to its current value, including any income generated. While total return offers a snapshot of growth, it falls short of capturing the level of risk taken to achieve those returns.

To gain a more meaningful understanding of performance of mutual funds, it is essential to evaluate risk-adjusted returns. Metrics such as the Sharpe Ratio or Sortino Ratio assess how efficiently returns are achieved relative to the amount of risk involved. For example, a portfolio with moderate returns and lower volatility might be more desirable than one with higher returns but significant swings in value. By incorporating these measures, wealth managers can ensure that the pursuit of returns is balanced with appropriate risk management, emphasizing sustainable, long-term growth over short-term gains.

Ultimately, the real measure of an investment’s success is whether it meets the objectives set forth at the outset. Too often, performance of minimum investment is evaluated against benchmarks or peer portfolios, which may not reflect the unique needs of the individual investor. Beating a benchmark is irrelevant if the portfolio falls short of funding critical goals like retirement or education. The focus should always remain on constructing a portfolio that not only meets, but exceeds, the client’s required objectives while taking on as little risk as possible. This approach prioritizes the client’s aspirations, ensuring that financial success is defined by personal outcomes rather than external comparisons.