Wealth management

Key Takeaways

  • Wealth management is an investment advisory service to manage financial assets and other high worth assets
  • Wealth management is mostly availed by high net worth clients 
  • Data Gathering, Analysis, Presentation, Implementation and Ongoing Communication are the five phases of wealth management

What is Wealth Management?

Wealth management is an investment advisory service to manage financial assets and other high worth assets such as personal tangible assets and immovable property, offered for a fee.

Wealth management is mostly availed by high net worth clients for a handsfree steering of their finances. 

The managers and investment advisors offering wealth management often have strong credentials with many years of experience and earned their stripes with their intellect in wealth management.

Understanding Wealth Management

Wealth management more than just giving investment advice. It takes into account all the aspects of an individual’s financial life. The thought behind availing wealth management services, by a high net worth individual, is that it might be more efficient to have a single manager to manage and advise upon all the financial assets rather than having different advisors for different financial assets and portfolios. Wealth management also usually facilitates smooth coordination of all the services needed to plan for the current and future financial needs.

In theory, it is generally assumed that a wealth manager can render services in any matter of financial field. But many times, that doesn’t happen as wealth managers choose to specialize in specific areas and offer services in the same domains.

Wealth advisors need affluent, high-net-worth or ultra-high-net-worth individuals but not all such people require a wealth advisor.

How does Wealth Management work?

Wealth management encompasses both special financial services and financial planning. Various services that come under wealth management are estate planning, retail banking services, investment management services and legal and tax advice.

The aim of wealth management is to ensure sustenance and long-term growth of an individual’s wealth.

The Wealth Management Process

The wealth management process can be divided into following 5 phases:

·       Data Gathering

To begin with, the wealth manager sits down with his/her clients and discusses the client’s values, goals and priorities. They discuss client’s short- and long-term goals and try to time frame them. Managers also try to understand a client’s risk appetite.

·       Analysis

In this phase, the gathered data is refined, and the results are analysed. According to the analysis, a financial plan is laid out, considering all the assets and liabilities of the client, to cater to all the financial needs to the clients and is in sync with the client’s comfort with risk.

·       Presentation

All the recommendations drafted during the analysis phase are presented to the client. In this step, the client reviews the recommendations made and may choose to make changes before giving approval. Wealth managers must make sure that the client understands every aspect of the recommendation.

·       Implementation

This is the most crucial part of the wealth management process. A proactive approach from the wealth managers is expected to properly execute the recommendations so that clients can achieve their goals.

·       Ongoing Communication

The results obtained from the implementation process are regularly monitored and the desired upgradation in the financial plan is made as and when required.