Wealth Management Definition

‘Wealth management’ is a thrown-around term in trade, boardrooms and by financial advisors in front of clients. But what exactly does it mean?

Wealth Management Definition

From the perspective of the affluent individual, wealth management is a means of enhancing their financial situation. From the eyes of the financial advisor, it is their or their team’s ability to provide an all-encompassing range of financial services and products to an affluent client in a consultative setting. The wealth manager gathers information about what the client wants and needs and crafts a bespoke strategy using the appropriate financial products and services.

For one set fee, wealth management advisors, also known as wealth managers, incorporate a variety of financial disciplines including legal or estate planning, investment advice, retail banking services, retirement planning and accounting and tax services to manage the affluent client’s wealth.

Adopting a holistic approach and having a single manager coordinate all the necessary services for the affluent individual to manage their money and plan for current or future financial needs is simpler than integrating pieces of advice and products from a number of experts. However, sometimes this is necessary.

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Wealth Management Advisor

In theory, wealth managers can provide their affluent client with every type of financial product or service out there. However, it is more common that they specialise in certain areas. This can be based on the particular wealth manager’s expertise or the business sector that they operate in. Sometimes, the wealth manager may need to bring in input from other financial experts and the affluent client’s own agents, for example, accountant or lawyer, to materialise the best strategy.

Wealth managers are also completely client-centred, as wealth management is always delivered in a consultative manner. To be a good wealth manager, it is important to meet affluent clients without having any assumptions about what financial products and services they will require.

It is common practice for an affluent individual to meet a wealth manager to address a particular area, for example, investment management. However, the overriding objective of the wealth management advisor is to understand the client’s full situation so they can provide the suitable financial products and bring in relevant financial experts. Wealth managers usually tend to work as part of a small business or a larger company with ties with the finance industry. An affluent client may utilise the services of one wealth manager or may use the services of numerous members of a wealth management team. Ultimately, wealth managers aim to remain at the affluent client’s service throughout their lifetime.

Wealth Manager vs Financial Advisor

Research has indicated that when a financial advisor transitions to a wealth management advisor they can see their profits surge by over 35 percent in a year. So, there is clearly a financial advantage of becoming a wealth manager. However, it shouldn’t be assumed that all financial advisors are good candidates for becoming wealth management advisors, nor should it be assumed that wealth management is the best solution for all affluent individuals. Wealth management is usually more suited to affluent clients who have diverse wants and needs.

What exactly does a wealth manager do?

The process usually starts with the wealth manager developing a plan that strives to maintain and increase the affluent client’s wealth, in accordance with their financial situation, comfort level with risk and what they want to get out of the service. After the development of the initial plan, the wealth manger organises regular meetings with the client to update the specific goals, reflect on the progress, review and rebalance the financial portfolio and examine the need for additional products or services.

Types of Wealth Management Products and Services

• Private Banking and Services
• Structured Investment Products
• Estate Planning
• Tax Planning
• Retirement Planning
• Insurance Policies
• Will Execution
• Traditional Investment Products, for example, equity, mutual funds etc.
• Legal Consultation
• Management of Trusts
• Fine Art Investments

Asset Wealth Management Definition

Wealth management and asset management are closely related. The former is broader, and the latter comes under the umbrella of wealth management services and relates to the management of assets and investments, including, bonds, stocks and real estate.

So, asset management advisors focus more on managing the client’s individual investments in the portfolio, including fixed income, real estate, equity and international investments. They also evaluate potential investments for their clients and make recommendations for their portfolio, based on their goals and risk tolerance.

However, whilst being slightly different, both wealth management and asset management are financial services with the purpose of maintaining and increasing wealth, investment income and profitability, as well as maximising returns.

Retail Wealth Management Definition

As we’ve established, the objective of wealth management is to maintain and grow wealth. The net worth necessary to qualify for such services differs across institutions. However, the threshold usually starts at approximately $20 million. Ultimately, wealth managers need affluent clients but affluent clients don’t necessarily need wealth managers. Therefore, affluent clients are sought after by financial service companies. Numerous banks combine wealth management services with traditional banking and attend to wealth management clients through specialised sales and services teams.

Wealth Management Firms in the UK

UBS Wealth Management

UBS Wealth Management sets out to guide its clients towards a better future for their investments, business and, as a consequence, their family. It provides a service that it refers to as a ‘total wealth solution’ that attends to its clients needs, from wealth planning to banking to investing.

Charles Stanley

This company is one of the leaders in wealth management services in the UK and it offers a broad range of products and services to meet its clients’ financial goals, including a personal investment manager, with whom clients will have an ongoing relationship, a network of 24 UK offices and a history of expertise that dates back to 1792.