Wealth management refers to a comprehensive set of financial services provided to clients, typically individuals or families with high or ultra-high net worth. These services include investment advice, financial planning, tax planning, estate planning, risk management, and other related services aimed at preserving, growing, and transferring wealth across generations.
Wealth management is designed to help clients achieve their financial goals and objectives by creating a customised plan that considers their unique needs, risk tolerance, and investment preferences. Wealth managers work closely with their clients to provide ongoing guidance and support to help them navigate the complexities of managing their wealth.
Wealth management advisories
A wealth management advisory (WMA) is a type of financial advisor or firm that provides comprehensive wealth management services to high-net-worth and ultra-high-net-worth individuals, families, and businesses. A WMA firm typically offers a range of services, including investment management, financial planning, estate planning, tax planning, risk management, and other related services designed to help clients preserve, grow, and transfer their wealth.
Wealth management advisors work closely with clients to develop customised strategies and solutions that meet their unique needs and goals. They often have a deep understanding of the complexities of managing substantial wealth and have access to specialised financial products and services that may not be available to the general public. Wealth management advisory firms may charge fees based on a percentage of assets under management or a flat fee, and they may require a minimum level of assets to become a client.
Wealth management in banks
Banks typically offer wealth management services through a dedicated division or subsidiary with specialised advisors who work closely with clients to create customised investment strategies that align with their unique goals and risk tolerance. These advisors have extensive knowledge and experience in financial planning, investment management, estate planning, tax planning, and risk management. They use this expertise to provide tailored advice and solutions to their clients.
Some banks have switched to a model that questions clients about life goals, work surroundings, and spending patterns to improve communication. To more clearly differentiate their wealth management services from less expensive brokerage firms, United Capital relaunched its wealth management offerings in 2015 under 'Financial Life Management'. The programme' Merrill Lynch Clear', which motivates investors to attain and identify life goals and includes an exclusive educational programme for clients' children, was launched by Merrill Lynch in the same year.
Differences between wealth management and investment advice
Wealth management and investment advice are both financial services that help clients manage their assets and achieve their financial goals, but there are some key differences between them.
Wealth management is a comprehensive approach to managing an individual's wealth that considers all aspects of their financial situation, including their investments, taxes, estate planning, risk management, and more. Wealth managers work with clients to create customised financial plans aligning with their goals, values, and risk tolerance. They also provide ongoing advice and support to help clients manage their finances over the long term.
Investment advice, on the other hand, is a narrower service that focuses specifically on helping clients manage their investments. Investment advisors typically guide investment selection, asset allocation, and portfolio management. They may also advise on other financial issues, such as tax planning and risk management, but their primary focus is managing their clients' investment portfolios.
One of the key differences between wealth management and investment advice is the scope of services offered. Wealth management is a more comprehensive service that covers all aspects of a client's financial situation, while investment advice focuses on managing investments. Wealth management is more personalised and tailored to each client's needs and goals. At the same time, investment advice may be more standardised and focused on achieving specific investment objectives.
Another difference between the two is the level of expertise and qualifications required. Wealth managers typically have a broader range of skills and capabilities, such as financial planning certification or advanced finance degrees. In contrast, investment advisors may have a more specialised background in investment management.
Overall, while there is some overlap between wealth management and investment advice, the two services are distinct and offer different levels of support and guidance to clients.
Advantages of wealth management
There are several advantages of wealth management for individuals with significant assets. Some of the main benefits include:
Personalised service: Wealth management is a highly customised service tailored to each client's needs and goals. Wealth managers work closely with clients to understand their financial situation and develop a customised plan that aligns with their objectives and risk tolerance.
Comprehensive approach: Wealth management takes a holistic approach to manage wealth, addressing all aspects of a client's financial situation, including investments, taxes, estate planning, risk management, and more. This helps ensure that all of a client's financial needs are addressed and that their wealth management is coordinated and integrated.
Access to expertise: Wealth management firms typically have a team of highly skilled professionals with expertise in a range of financial areas, including investment management, tax planning, estate planning, and more. This gives clients access to a broad range of expertise and knowledge they may need help with.
Efficient use of resources: Wealth management firms can help clients make the most efficient use of their financial resources by optimising their investments, minimising taxes, and identifying other opportunities to grow and preserve their wealth.
Risk management: Wealth managers help clients manage risk by developing strategies to mitigate potential risks and protect their assets from market volatility, economic downturns, and other potential threats.
Peace of mind: By working with a wealth management firm, individuals can have peace of mind knowing that their wealth is managed by a team of professionals dedicated to helping them achieve their financial goals and objectives. This can reduce stress and anxiety related to managing money and allow individuals to focus on other aspects of their lives