Shane Tenny, CFP®, answers a common question we receive from clients - What is the difference between investment management and financial management?
Transcript:
SHANE TENNY: Hi there. Shane Tenny, managing partner at Spaugh Dameron Tenny.
In the world, finance can be complicated and confusing. Let's face it: like most professions, we have our own vocabulary, acronyms, strategies, and dialect. It can be overwhelming if you don't live in it every day.
One of the areas of question and confusion we hear most from clients is understanding the difference between investment management and financial planning.
You see, they definitely overlap as disciplines, but there is material difference as well. And so often the advertisements, the messaging, the inducements that we see online or on TV have to do with investment management and not financial planning.
I wanted to take a minute here and just share with you some thoughts about how these two things are similar and how they're different.
You see, investment management at its core is about managing investments, whereas financial planning at its core is about managing investor behavior and strategies.
Investment management is about measuring your portfolio by comparing the results to an index or a benchmark.
In financial planning, we're measuring your progress against the only thing that really matters in the end, which is your goals.
Investment management is about allowing your money to work for you to help you reach your financial dreams.
Financial planning is about helping you define your goals, and dreams, and desires, and fears.
Investment management definitely takes into account the market and the economy.
In financial planning, we're developing strategies based on your economy.
In investment management, we're focused on creating a portfolio that can survive big market volatility.
In financial planning, we're creating strategies that can help you survive big life volatility.
In investment management, it's where we make decisions about where to invest your money.
In financial planning, we're figuring out how and when to invest your money.
Investment management helps you understand how much you need to earn on your investments to meet your future spending needs.
In financial planning, we're helping you figure out how much you need to save to meet your future spending needs.
Investment management is about reducing anxiety that can come during market volatility.
In financial planning, we're working to reduce the anxiety that comes from making big life decisions with your money.
Investment management involves growing your money so that someday you can become wealthy.
In financial planning, we're really figuring out what a wealthy life means for you.
In my opinion, to get the most out of investment management, it has to be executed in the context of an ongoing financial planning relationship.
Things to think about I'll see you back here next time. Bye.