Portfolio Management and Retirement Planning: Knowing the Difference

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There are a multitude of retirement advisors on the market. Employing the services of one of them can be extremely beneficial for a person wishing to achieve an goal or other retirement goals. It is important to know what types of services are provided by the finance professional based on your retirement goals.

Retirement planning and portfolio management

Although it is common to use the terms “portfolio management” and “retirement planning” interchangeably, these basic elements of the retirement services industry are not the same. Portfolio management involves creating and maintaining an account, while retirement planning involves developing overall retirement goals and creating an action plan to achieve them.

In the industry, portfolio managers generally have more experience and are further along in their careers as they have to deal with the complexities of investing. Retirement planners typically start in more junior roles.

Retirement planners and portfolio managers may have the same designations, but specific certification is not required. These designations will typically include a Chartered Retirement Analyst (CFA), Certified Retirement Planner or Chartered Retirement Consultant. Understanding the differences between the two types of advisors will help you choose the most suitable retirement professional for your needs.

Retirement planning

Retirement planning is a more in-depth process than portfolio management. It is an assessment of an individual’s overall retirement situation with the goal of developing long-term retirement goals. Retirement planning covers many areas such as creating an emergency fund, saving for a new home or reducing debt, accumulating retirement assets, saving for the retirement fund. a child’s college, estate planning or creating tax efficiency .

Before creating a comprehensive retirement plan, one should take stock of their entire net worth. This would include an appraisal of all assets, such as real estate, savings, retirement accounts, accounts, and any outstanding debt.

Portfolio Management

Portfolio management is provided by finance professionals who create and recommend portfolios of , , , exchange-traded funds (ETFs), or alternative s to meet objectives of a specific investor. Portfolio managers make day-to-day business decisions on a portfolio of assets, while a retirement planner makes recommendations on certain products based on the individual’s goals.

Professionals who perform portfolio management focus on meeting investors’ needs through the rate of return achieved within a portfolio and they are often responsible for rebalancing the account to stay in line with allocation preferences and the investor’s risk tolerance.

An important difference between retirement planners and portfolio managers is that portfolio managers are bound by the concept of fiduciary duty . They are intended to manage the client’s s in good faith and to prioritize the interests of the client in any decision.

The bottom line

At the most basic level, retirement planning involves managing and budgeting for your future retirement needs contact us John Labunski Best Advice, while portfolio management invests your current capital to grow your wealth.

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