Definition
Wealth management is an investment-advisory discipline which incorporates financial planning, investment portfolio management and a number of aggregated financial services. High-net-worth individuals, small-business owners and families who desire the assistance of a credentialed financial advisory specialist call upon wealth managers to coordinate retail banking, estate planning, legal resources, tax professionals and investment management. Wealth managers can have backgrounds as independent Chartered Financial Consultants, Certified Financial Planners or Chartered Financial Analysts, Chartered Strategic Wealth Professionals, Chartered Financial Planners, or any credentialed professional money managers who work to enhance the income, growth and tax-favored treatment of long-term investors.
Wealth Management
What is ‘Wealth Management’
Wealth management is a high-level professional service that combines financial and investment advice, accounting and tax services, retirement planning and legal or estate planning for one set fee. Clients work with a single wealth manager who coordinates input from financial experts and can include coordinating advice from the client’s own attorney, accountants and insurance agent. Some wealth managers also provide banking services or advice on philanthropic activities.
Explaining ‘Wealth Management’
Wealth management is more than just investment advice, as it can encompass all parts of a person’s financial life. The idea is that rather than trying to integrate pieces of advice and various products from a series of professionals, high net worth individuals benefit from a holistic approach in which a single manager coordinates all the services needed to manage their money and plan for their own or their family’s current and future needs.
Wealth Management Example
For example, those in the direct employ of a firm known for investments may have more knowledge in area of market strategy, while those working in the employ of a large bank may focus on areas such as the management of trusts and available credit options, overall estate planning or insurance options. The position is considered consultative in nature as the primary focus is providing needed guidance to those using the wealth management service.
Wealth Management Business Structures
Wealth managers may work as part of a small-scale business or as part of a larger firm, most often one directly associated with the financial arena. Depending on the business, wealth managers may function under different titles including financial consultant or financial advisor. A client may receive services from a single designated wealth manager or may have access to members of a specified wealth management team.
Strategies of a Wealth Manager
The wealth manager starts by developing a plan that will maintain and increase the client’s wealth based on that individual’s financial situation, goals and comfort level with risk. After the original plan is developed, the manager meets regularly with clients to update goals, review and rebalance the financial portfolio, and investigate whether additional services are needed and with the goal of remaining in the client’s service throughout his lifetime.
Further Reading
- Servicing the super-rich: New financial elites and the rise of the private wealth management retail ecology – www.tandfonline.com [PDF]
- Evaluating business performance of wealth management banks – www.sciencedirect.com [PDF]
- A hybrid financial performance evaluation model for wealth management banks following the global financial crisis – www.tandfonline.com [PDF]
- Asset-liability management in private wealth management – jpm.pm-research.com [PDF]
- Goal-based wealth management in practice – jwm.pm-research.com [PDF]
- In the shadow of banks: Wealth management products and issuing banks' risk in China – papers.ssrn.com [PDF]
