Wealth management is a set of financial services for wealthy individuals or families. It encompasses investment advice, financial and estate planning, tax and risk management, and more. The aim is to preserve, grow, and transfer wealth across generations.
This service is customised to help clients meet their financial goals. Wealth managers guide clients through the complexities of managing their wealth.
Wealth management advisories
A wealth management advisory (WMA) is a financial advisor or firm that provides extensive wealth management services. They assist high-net-worth individuals, families, and businesses. The services include investment and financial planning, estate and tax planning, risk management, and others.
WMAs develop customised strategies for clients based on their needs and goals. They understand the intricacies of managing significant wealth and have access to specialised financial products and services. WMAs usually charge fees based on a percentage of assets under management or a flat fee.
Wealth management in banks
Banks offer wealth management services through a division or subsidiary. Specialised advisors create customised investment strategies for clients based on their goals and risk tolerance.
Some banks use a model that considers clients' life goals, work environments, and spending habits to improve communication. To differentiate their services, some banks, like United Capital and Merrill Lynch, have rebranded their wealth management offerings.
Wealth Management vs Investment Advice
Though both financial services, wealth management and investment advice differ in a few ways.
Wealth management is a holistic approach to managing wealth. It includes investments, taxes, estate planning, risk management and more. Wealth managers create customised financial plans and offer continuous advice and support for long-term financial management.
Investment advice is a narrower service focusing on investment management. Investment advisors guide investment selection, asset allocation, and portfolio management. They may also advise on tax planning and risk management, but primarily manage investment portfolios.
Wealth management offers a broader service and is more personalised, while investment advice is more standardised and focuses on specific investment goals. Wealth managers are usually more qualified with a wider range of skills.
In conclusion, while they have some similarities, wealth management and investment advice are unique services offering different levels of client support and guidance.
Wealth management benefits
Wealth management has numerous advantages for those with substantial assets, such as:
Custom service: Wealth managers create a personalized plan to align with each client's financial goals and risk tolerance.
All-inclusive approach: Wealth management addresses all financial aspects, ensuring a coordinated wealth management plan.
Expert access: Clients gain access to a team of professionals specialized in various financial areas.
Resource optimization: Wealth management firms help clients efficiently use their resources by maximizing investments and minimizing taxes.
Risk management: Wealth managers create strategies to protect assets from potential risks, such as market volatility and economic downturns.
Peace of mind: Clients can trust a team of professionals to manage their wealth, reducing stress and freeing time for other life aspects.