Wealth management can
be defined as an umbrella term used to cover a various services provided to
individuals and families by a wealth management professional.
The Services can
include but not limited to advice on financial planning including retirement
and investment strategies, estate planning, tax and accounting services and
more. More often than not, the wealth manager relies on a team of specialists,
including accountants, securities brokers, insurance, and estate planning
professionals to determine the best course of action in managing a client’s
wealth and assets.
Wealth Management Can Apply to Everyone
It is well known that wealth
management is an investment advisory service for high net worth individuals and
it combines both financial planning and specialized financial services,
including personal retail banking services, estate planning, legal and tax
advice, and investment management services.
Wealth management can
now be broken the spectrum of wealth into three groups. They include:
1. Little Wealth: This goes for those with little resources; one may
not be able to afford the associated services or products for the management of
their limited wealth. They may be able to keep a roof over their head and food
on the table but have no extra resources to protect their limited wealth.
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2. Moderate Wealth: With greater abundance, which could be
characterized as being in “the middle class,” allows for more options and the
greater likelihood that individuals and families can afford to implement
techniques or products to grow, protect, utilize or disseminate their wealth.
Also, this can include,
buying certain types of insurance policies, planning for education or
retirement or engaging the services of an estate planning attorney. These
different processes, services or products, are more often obtained from
different providers or firms. There is no or little coordination between the
3. Great Wealth: With more assets there are greater complexities and
more options to wealth management. With greater wealth, it is more prevalent to
adopt an overall or encompassing approach or interconnected level of services.
This is the level of services that the industry or press and media often refer
to as “wealth management”. Most firms offer the truly affluent one of two approaches
to wealth management. They include:
– Collaborative approach: In this situation a firm or an individual
will often act as the hub of a team of advisors. This approach can include a
Certified Financial Planning professional (CFP) providing the financial
planning processes and investment management but in coordination with the
individual or family’s other advisors (tax, legal, insurance, etc.). By doing
so, there is an integrated approach to growing, protecting, utilizing and
disseminating the clients’ wealth.
– Single office approach: This kind of approach is more often than
not offered by big banks, brokerage firms or what are known as family offices.
The firm will have staff that deals with particular areas such as investments,
others for risk mitigation, and will have professional staff for estate
planning, and tax planning, etc. and they are all in one office.
been quick to see the value in supporting their advisors in providing
additional services to the wealthy. LPL Financial Services as an example,
within the past few years, acquired a mortgage company, a general insurance agency
and trust company to be able to sell additional services to their advisors’
At this juncture, it is
absolutely germane to note that no matter your level of wealth, it would be
worthwhile to determine how you plan to grow, protect, utilize and disseminate
your wealth. Thus, wealth management is key to individuals and families.