Wealth Management:

Wealth Management is a service provided by financial institutions to help high net worth individuals protect and grow their wealth. This advanced investment advisory discipline involves providing a diverse range of services, such as financial planning, investment management, tax planning and cash flow and debt management, based on client requirement

What Does Wealth Management Mean?
A professional service which is the combination of financial/investment advice, accounting/tax services, and legal/estate planning for one fee 11
In general, wealth management is more than just investment advice, as it can encompass all parts of a person’s financial life.

Why Do You Need Wealth Management?
Wealth management helps people determine their monetary goals and develop actionable strategies that could help them realize their goals. It also defends their finances against risks. Wealth management is a service designed specifically forhigh net worth individuals. The threshold for high net worth varies by country and institution, but the most common definition is individuals who have more than US$1 million in assets, not including their home. Some high net worth individuals have done well ingrowing their assets from a low base to their current levels, and may feel that they can continue to manage their own portfolios. However, as a person’s wealth grows and/or the markets get more challenging, it becomes increasingly difficult to realize theexpected returns.

With greater wealth comes greater investment options as well as more complex risks and threats in terms of legal regulations, taxation issues and opportunities for loss. The level of fear or even outright panic that can be experienced grows with the sizeof the investment involves. Greater diversification is needed than in earlier stages of investing. This is where independent financial advisers or large corporate entities help their clients through professional wealth management.

Wealth Management offers the following services:

• Investment planning: assists you in investing your money into various investment markets, keeping in mind your investment goals.
• Insurance planning: assists you in selecting from various types of insurances, self insurance options and captive insurance companies.
• Retirement planning: is critical to understand how much funds you require in your old age.
• Asset protection: begins with your financial advisor trying to understand your preferred lifestyle and then helping you deal with threats, such as taxes, volatility, inflation, creditors and lawsuits, to maintaining this lifestyle.
• Tax planning: helps in minimizing tax returns. This might include planning for charity, supporting your favorite causes while also receiving tax benefits.
• Estate planning: helps in protecting you and your estate from creditors, lawsuits and taxes. This service is critical for every person whose net worth is high.
• Business planning: This service aims at optimizing the tax free advantages of running your own business.
• Business succession planning: assists in planning for the inevitable to maximize returns.
• Wealth transfer: helps you pass on your wealth to your dependents.

Benefits of Wealth Management

Wealth Management helps in:

• Reducing taxes associated with income, capital gains and estate.
• Protecting assets from misjudgments and creditors.
• Improving yields with more diversification and less risk.
• Managing liabilities such as mortgages and college funding.

Wealth Management Process
Financial Planning / Consulting Services:

Step 1 – Organize
Organization of client data and establishment of goals and objectives
Evaluation of client risk profile and current asset/investment positioning
Generation of financial/cash flow projections to project likelihood of success

Step 2 – Formalize
Development of customized Strategic Asset Plan.
Consider various allocation strategies and manager structures.
Recommend overall investment strategy.
Investment Advisory Services:

Step 3 – Implementation
Implementation of Strategic Asset Plan and related investment strategies.
Coordination of services of other professional services providers.

Step 4 – Monitoring
Monitor and rebalancing of supporting investment strategies.
Quarterly performance reporting and client meetings.
Maintenance and annual updating of Strategic Asset Plan.

What Does Wealth Management Mean?
A professional service which is the combination of financial/investment advice, accounting/tax services, and legal/estate planning for one fee
In general, wealth management is more than just investment advice, as it can encompass all parts of a person’s financial life.

What Does Wealth Management Mean?
A professional service which is the combination of financial/investment advice, accounting/tax services, and legal/estate planning for one fee
In general, wealth management is more than just investment advice, as it can encompass all parts of a person’s financial life.

Related Terms

• Asset Management
• Effective Net Worth
• Portfolio Management
• Sophisticated Investor
• Wealth
• More Related Terms

Asset Management
What Does Asset Management Mean?

1. The management of a client’s investments by a financial services company, usually an investment bank. The company will invest on behalf of its clients and give them access to a wide range of traditional and alternative product offerings that would not be to the average investor.

2. An account at a financial institution that includes checking services, credit cards, debit cards, margin loans, the automatic sweep of cash balances into a money market fund, as well as brokerage services.
Also known as an “asset management account” or a “central asset account

Asset Management
1. The expense of this service generally restricts it to high net-worth individuals, governments, corporations and financial intermediaries. This includes such products as equity, fixed income, real estate, agriculture and international investments.

2. When individuals deposit money into the account, it is placed into a money market fund that offers a greater return that can be found in regular savings and checking accounts. The added benefit to individuals is that they can do all of their banking and investing at the same institution instead of having a bank and brokerage account at two different companies.

http://www.investopedia.com/terms/a/assetmanagement.asp#axzz1c8qpVBSE

Effective Net Worth
What Does Effective Net Worth Mean?
The shareholders’ equity of a corporation, plus subordinated debt. Effective net worth is particularly useful in closely held corporations, since executive officers in these entities are also its owners. Subordinated debt can include debentures or loans to the firm by an owner. Such owners’ loans are considered an extension of the company’s net worth, provided a subordination agreement is already in place.
Effective Net Worth
For example, a closely held corporation with total assets of $10 million and total liabilities of $6 million would have a net worth of $4 million. Assume total liabilities include subordinated loans such as debentures and loans from owners of $1 million. Effective net worth in this case would be $5 million.

Portfolio Management
What Does Portfolio Management Mean?
The art and science of making decisions about investment mix and policy, matching investments to objectives, asset allocation for individuals and institutions, and balancing risk against. performance.

Portfolio management is all about strengths, weaknesses, opportunities and threats in the choice of debt vs. equity, domestic vs. international, growth vs. safety, and many other tradeoffs encountered in the attempt to maximize return at a given appetite for risk.

Portfolio Management
In the case of mutual and exchange-traded funds (ETFs), there are two forms of portfolio management: passive and active. Passive management simply tracks a market index, commonly referred to as indexing or index investing. Active management involves a single manager, co-managers, or a team of managers who attempt to beat the market return by actively managing a fund’s portfolio through investment decisions based on research and decisions on individual holdings. Closed-end funds are generally actively managed.

Sophisticated Investor
What Does Sophisticated Investor Mean?
A type of investor who is deemed to have sufficient investing experience and knowledge to weigh the risks and merits of an investment opportunity.
For certain purposes, net worth and income restrictions must be met before a person can be classified a sophisticated investor. The distinction makes an investor eligible to buy into certain investment opportunities, such as pre-IPO securities, that are considered “non-disclosure” or “non-prospectus” issues. Typically, a sophisticated investor must have either a net worth of $2.5 million or have earned more than $250,000 in the past two years to qualify.

Sophisticated investors may have to prove their net worth prior to being eligible to purchase certain security types. Investors will often have their personal accountants send this proof to the brokerage firm. Sophisticated investors are the dream clients of most financial services firms, as they generate much higher fees than retail investors.

Certain assumptions are made about sophisticated investors: that they can hold their investments indefinitely (the funds do not need to be liquidated for cash needs), and they can assume a total loss of investment principal without causing severe damage to their overall net worth.

Wealth
What Does Wealth Mean?
A measure of the value of all of the assets of worth owned by a person, community, company or country. Wealth is the found by taking the total market value of all the physical and intangible assets of the entity and then subtracting all debts.

Essentially, wealth is the accumulation of resources. People are said to be wealthy when they are able to accumulate many valuable resources or goods. Wealth is expressed in a variety of ways. For individuals, net worth is the most common expression of wealth, while countries measure by gross domestic product (GDP) or GDP per capita.

Wealth Management
Wealth Management entails the following steps:
1. Recognize the need for wealth management planning
2. Identify the components of a successful wealth management plan
3. Select your wealth management team and define each member’s role
4. Adhere to well-established, scientific, and appropriate investment principles
5. Establish the legal foundation to execute one’s wishes to provide the maximum possible benefits to the heirs through the creation and implementation of an estate plan
6. Update your beneficiaries and accurately title your assets
7. Properly manage your liabilities (debt)
8. Learn and adopt good financial management habits
9. Plan your retirement, health, and long term care needs
10. Contribute to the well-being of others by gifting during your lifetime or at death in tax advantageous manner
11. Minimize and manage your tax liabilities
12. Develop a business succession plan and / or deal with company stock option issues and highly concentrated investment positions whether in specific stocks or certain sectors of the market
13. Develop and implement an asset protection strategy
14. Utilize insurance to mitigate against catastrophic losses and to leverage premiums paid for a host of insurance uses and benefits
15. Select a wealth advisor to oversee your wealth management process