Wealth management
Wealth Management is classified as an advanced type of financial planning that provides High net worth individuals and families with private banking, estate planning, asset management, legal resources, and investment management, with the goal of sustaining and growing long-term wealth. The usefulness of and the need for wealth management is inherent in its name. Whereas financial planning can be helpful for individuals who have accumulated wealth or are just starting to accumulate wealth, you must already have accumulated a significant amount wealth for the wealth management process to be effective.
Examples of Wealth Management include HSBC's Premier [1] Citibank's Citigold and other extensions of retail banking services designed to focus on High-Net Worth retail customers. Such customers would be called internally in a bank 'mass affluent' or 'upper retail' clients because of their Net worth, the number of potential products they own from the bank, their AuM (Assets under management) and other methods of segmentation. The banks create separate branches, services and other 'benefits' to retain or attract these customers who are typically more profitable than other retail banking customers. However, WM clients are NOT Private Banking clients because they simply do not have the Net Worth or AuM to justify the level of banking services that Private Banks provide.
Background
Wealth Management is a term that originated in the 1990s in the US with the Broker Dealers, Banks, and Insurance Companies. Wealth Management has generally evolved from high net worth financial consulting for persons who are top clients of any firm, to a high level form of private banking that provides various types of investment, insurance and bank products and services. With the repeal of the Glass-Steagall Act in 1999, financial firms were finally able to provide all three of the above services from the same offices.
With the emergence of wealth management as a career opportunity as well as a professional service in high demand, educational programs such as the American Academy of Financial Management CWM Certified & Chartered Wealth Manager program are providing customized wealth management executive training to corporations and individuals alike. As wealth management serves a much more affluent community, many Chartered Financial Analysts, Certified Public Accountants, Certified Wealth Managers, government-licensed lawyers, and sometimes an insurance professional who is a Certified Financial Planners are involved in this type of high-net-worth consulting. Keep in mind that only Lawyers and CPAs have a government license to provide legal or tax advice on complex wealth management, estate planning, tax law, retirement or other legal issues such as business succession or divorce.[citation needed] As a note, an RIA (registered investment advisor) with the SEC or a person holding an RIA license can charge fees for investment advice.
Persons engaged in wealth management usually work for investment banks, brokerage firms, law firms, accounting firms, consumer banks, trust departments, or investment and portfolio management firms. Smaller firms such as Registered Investment Advisors may also provide a wide array of family office services.
Client Segmentation and Management
Target clients of Wealth Management are typically known as "High Net Worth Individuals" or "Mass Affluent" retail banking customers. Many banks define these target clients as having a minimum Net Worth or Asset Base which make them attractive customers for retail banks. Target clients in this space typically have a net worth (or positive asset base) of somewhere from between US$150,000 and US$1,000,000 ($1 million)[1]. Whereas Private Banking clients typically have a net worth of greater than US$1,000,000 but increasingly expectations are around US$5,000,000 ($5 million).
Services
Services typically include:
- Portfolio Management and Portfolio Rebalancing
- Investment Management and Strategies
- Trust and Estate Management
- Private Banking and Financing
- Tax Advice
- Family Office Structures and Management
Products
Products could include the following:
- Stocks and Stock Trading
- Equity Linked Investments
- Structure Savings Products
- Structured Investment Products and Derivatives
- Foreign Exchange
- Mutual Funds and Unit Trusts
- Property Management and Investment
- Alternative Investments including:
- Art
- Wine
- Precious Metals
- Property
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References
- is an example of Risk Management based Wealth Managers
- Privatebanking.com is the portal of Private Banking and Wealth Management
- Wealth Management Department of Treasury Handbook
- Federal Reserve Comments
- Dictionary - Wealth Management
- Opportunity Knocks - Unlocking the Wealth Management Potential in Asia, Deloitte & Touche - Financial Services [2]
- [3]* Example of a wealth manager