How a financial advisor can help create and preserve wealth

I’ve engaged with many clients over my many years as a Wealth Manager with NFB Private Wealth Management and these discussions often include, especially when it’s a potential or new client, a chat around expected returns.

Stephen Katzenellenbogen CFP®

Stephen Katzenellenbogen CFP®

Private Wealth Manager

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How a financial advisor can help create and preserve wealth



I’ve engaged with many clients over my many years as a Wealth Manager with NFB Private Wealth Management and these discussions often include, especially when it’s a potential or new client, a chat around expected returns. A wealth managers role, in our view, is not so much as to create wealth bur to rather to preserve wealth. A concept that goes hand-in-hand with this is that very often your private business can deliver, on average, a long-term return higher than the market but this comes with a very different risk and liquidity profile as well an outcome that is far more binary (succeed or fail) than a diversified investment portfolio. 


There a few thoughts that follow on from my introduction:

1. Wealth preservation does not mean that you make no return; in fact it entails pursuing a return that is at least equal, but preferably and most likely in excess, to inflation. Your probable return above inflation will be shaped by your risk piffle which in turn has its own drivers. A return in excess of inflation ensures that you retain the purchasing power of your savings; said another way your baseline outcome should be along the lines of maintaining and hopefully growing the real (inflation adjusted) value of your investments

2. If you have not saved enough money, then no matter how skilled your financial advisor is or how low your costs are it is unfortunately highly likely you will never have enough money as you would need or like. Its very important to be realistic about the purchasing power of your capital at retirement; what may seem like a big lump sum may not deliver as high an income as you would like. This also supports the idea of starting t save as early as you can and as much as you can.


So, how can a financial advisor help you create wealth?

During your career: it’ important to know how much you need to save in order to try and reach your financial goals.These goals can include short, medium- and long-term objectives. A financial advisor can work out how much you need to save as well as where to save whilst taking into to account liquidity, tax and risk. Any projections that someone does for you are, perhaps stating the obvious, hypothetical and come with a few health warnings:

  • Most calculators assume linear returns which pretty much never happens (sequencing risk)
  • Rather err towards inputting returns on the lower end of your expectations
  • Increasing or decreasing your inflation and return expectations over a period has a significant impact on the outcome.

At retirement: After you’ve spent a good chunk of your life working you are not likely in a position to be able to recreate your wealth. At this point your advisor should be guiding towards a plan that:

  • Doesn’t put your capital at excessive or unnecessary risk
  • Caters for a sustainable income taking in to account your probable ad-hoc requirements and importantly for the unlikely (which somehow often ends up happening)
  • Considers your generational wealth ambitions

your retirement plan should be fitting at the time you retire but from thereon ‘life happens’.Regular meetings with your advisor are central to being able to take stock of the prevailing market, tax and regulatory environment, as well as, and very importantly, your changing personal circumstances.

During retirement: your retirement plan should be fitting at the time you retire but from thereon ‘life happens’.Regular meetings with your advisor are central to being able to take stock of the prevailing market, tax and regulatory environment, as well as, and very importantly, your changing personal circumstances.


My article has up until now homed in on the savings aspect of wealth creation and preservation. The concept of wealth creation and preservation goes beyond just the value of your investments:

Disability: if you are partially are permanently disabled during your working life you have unexpectedly ended your ability to earn and save. A thirty-year old who’s earning R1m a year will, assuming a 6% growth in income per annum, earn R118m over their 35-year workign career (R15m in present value terms).  Nobody expects anything to happen to them, but you need to make sure you are covered for any unplanned loss in income, due to disability or ill health, and that this will not stop your wealth creation ambitions. Income protection and severe illness cover tend to be grudge payments but they are very important.

Death: I recall reading that JP Morgan, the founder of the well-known company, lost a significant amount of his wealth on death due to bad planning. For some of us wealth creation and preservation are focussed on the now, but for others the focus is on the generational continuity of accumulated wealth. Appropriate planning from a financial advisor can optimise the tax position of your estate and ensure you have enough liquidity to meet your obligations. This planning manifest in:

  • An appropriate blend of investment products
  • Sufficient life cover if it is necessary
  • A Will or Wills that are congruent with your wishes and prevailing legislation

I’ve tried to outline the important role that a financial advisor can play in your financial wellness, and amongst other things, guide you towards wealth creation and preservation. What I have also tried to convey is that the process it not something that you can abdicate, and you cannot expect your financial advisor to be the purveyor of miracles. Wealth creation starts with you but will be amplified, simplified and solidified by engaging a good financial advisor.


Good luck!

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