Skip to Main Content

Wealth Enhancement vs Wealth Management

Peter Katevatis - Feb 16, 2017
Our industry loves to introduce new terms to better describe our services, however it generally confuses the public.  If you have been saving and investing for multiple years you know exactly what I’m talking about.  Financial institutions are doing

Our industry loves to introduce new terms to better describe our services, however it generally confuses the public.  If you have been saving and investing for multiple years you know exactly what I’m talking about.  Financial institutions are doing a lot of marketing going into the March 1, 2017 RRSP Deadline so here is a definition guide with historical context to help you understand our jargon.

 

Where will your investments take you? Katevatis Wealth Management

 

Investment Advisor – this is my title but it used to be Registered Representative and historically Stock Broker.  The addition of our broad service offerings has blurred the traditional role of investment advice.

 

Financial Planner – These individuals are generally not licenced to invest in specific shares or bonds and focus on mutual fund products.  The term is confusing due to its broad use which includes individuals skilled in complex tax and estate structures to people who can help you save money on your monthly cable bill.

 

Wealth Management – Once an individual has attained a certain level of wealth, broad planning to ensure their assets can help them attain their goals is the primary focus.  This includes retirement planning, tax planning, estate planning, and minimizing risks to their current standard of living.

 

Wealth Enhancement – This is what clients mean when they say, “Make my money grow!”  This involves the tricky process of maximizing returns while minimizing risk.  Honest self-assessment is the key to matching an individual to suitable investments they are comfortable with.

 

Registered Plans – RRSP (Registered Retirement Savings Plan), TFSA (Tax Free Savings Account), RRIF (Registered Retirement Income Fund), RESP (Registered Education Savings Plan) are the most commonly used investment accounts that can help keep your tax bill low.  These plans offer a tax free environment within which you can choose your investments.  Avoiding taxes is legal, evading taxes is not.

 

Exchange Traded Fund (ETF) – These equities are generally a low cost diversified investment that replaces some traditional mutual funds.  Not all ETFs are built alike so you need to read the fine print.

 

Mutual Funds - These packaged investments offer instant diversification to a professional manager.  A great first step to savings but often have higher fees than other managed investment products.

 

Value Stocks – Companies that are defensive in nature are deemed value stocks due to being underpriced based on fundamental factors.  The belief with value companies is that eventually they will trade higher to match their peers.

 

Growth Stocks – These are companies with growing revenue and prices that benefit from strong momentum.  They tend to trade with a higher valuation than their peers and have a propensity to be higher risk.

 

Bonds/Fixed Income - This asset class represents one of the largest pool of capital in the world but often overlooked by individuals.  Bonds offer stable returns at lower risk but can be tricky in a rising rate environment.

 

We have seen recent record highs in the large capitalization US indexes and renewed excitement with some smaller capitalization names.  With more money flowing into index funds I feel it is more important than ever to review your asset allocation and ensure your investments are properly positioned.  Feel free to contact our team for a complementary review of your situation, we are always happy to help enhance and manage your wealth.