WEALTH MANAGEMENT
Wealth management is a type of financial advisory service for investors with High net worth. Wealth managers provide advice and suggestions about investing rationally, taxes, estate planning and anything else that can assist the HNIs in wealth creation. In this article, we are going to cover what is wealth management in detail, how it works and also compare it with asset management.
WHAT IS WEALTH MANAGEMENT?
Investors who have high net worth may need more specific services than those offered by conventional financial experts and advisors. Those with lakhs or perhaps crores of rupees may have complex portfolios clubbed with even more complex tax systems and other needs that are unlikely to apply to average investors. It often has access to a wider range of financial services and products. Although HNIs pay a fee, they receive strategies and plans designed with their finances and needs in mind.
Services offered can include:
- Estate and legal planning,
- Accounting and tax services
- Investment advice and management, including retirement planning
- Charitable giving plans
- Review of healthcare and social security benefits
- Help with selling or starting a venture
If investors do not have a high net worth, they likely do not need a wealth manager. They may instead go ahead with an investment or financial advisor who can assist in growing their funds over time.
WORKING OF WEALTH MANAGEMENT
Like most investment and financial advisors, wealth managers earn by taking a specific percentage of the assets that they manage. This can vary between firms and for that matter even across different types of accounts within the same firm. HNIs can expect to see the expense ratio or fees around 1% of assets under management. For investment advisors, breaking into wealth management is a great career advancement. Consider that if a wealth manager were to charge just 0.5% of a client with Rs 10 Crore in their portfolio, they will earn Rs. 5,00,000 in commission that year from one client. The more clients an advisor has, the more these fees can grow.
HOW TO FIND WEALTH MANAGERS
If HNIs are looking for a wealth manager, there are several options available. Shop around and find one best suited advisor as per the feasibility and need. Many people choose to work with private wealth advisors and managers who can offer highly personalised services to their clients.
Others may want to work with the wealth management division of large institutions. These financial services are less personalised but at the same time they can leverage greater amounts of capital by pooling the resources of many wealthy clients.
You can also get in touch with us at ZFunds for excellent and benchmark beating wealth management services which are highly personalised as per your goals, need, time and availability of funds.
ASSET MANAGEMENT VS WEALTH MANAGEMENT
| Asset Management | Wealth Management |
| Is available in same manner and form for everyone | Reserves specifically and exclusively for HNIs |
| Its scope is narrowed than wealth management | Its scope is much broader than asset management |
| Concerns assets classes such as shares, cash, real estate and bonds | Concerns taxes, trusts, assets classes and more |
| Can apply to business, individuals or any other entity | Is for families and individuals |
THE CRUX
Wealth management is identical to asset management in many ways. But it is a much broader practice. The prime difference is clear when you think about the two terms. Asset concerns to asset classes including stocks, debt, cash and real estate. Wealth concerns all the aspects of money and wealth which includes tax, business, legal issues that can affect an individual or a family.
Asset management is very easily available. Wealth management is reserved for HNIs. Asset management on the other side is not reserved and can be used by everyone. Even businesses can make use of asset management. This makes sure that company assets are being utilised in the most effective and efficient manner possible.