Wealth management (WM) or wealth management advisory (WMA) is an investment advisory service that provides financial management and wealth advisory services to a wide array of clients ranging from affluent to high-net-worth (HNW) and ultra-high-net-worth (UHNW) individuals and families. It is a discipline which incorporates structuring and planning wealth to assist in growing, preserving, and protecting wealth, whilst passing it onto the family in a tax-efficient manner and in accordance with their wishes. Wealth management brings together tax planning, wealth protection, estate planning, succession planning, and family governance.
Private wealth management is sought by high-net-worth investors. Generally, this includes advice on the use of various estate planning vehicles, business-succession or stock-option planning, and the occasional use of hedging derivatives for large blocks of stock.
A wealth management consultation.
Traditionally, the wealthiest retail clients of investment firms demanded a greater level of service, product offering and sales personnel than that received by average clients. With an increase in the number of affluent investors in recent years,[1] there has been an increasing demand for sophisticated financial solutions and expertise throughout the world.
The CFA Institute curriculum on private-wealth management indicates that two primary factors distinguish the issues facing individual investors from those facing institutions:
Time horizons differ. Individuals face a finite life as compared to the theoretically/potentially infinite life of institutions. This fact requires strategies for transferring assets at the end of an individual's life. These transfers are subject to laws and regulations that vary by locality and therefore the strategies available to address this situation vary. This is commonly known as accumulation and decumulation.
Individuals are more likely to face a variety of taxes on investment returns that vary by locality. Portfolio investment techniques that provide individuals with after tax returns that meet their objectives must address such taxes.
The term "wealth management" occurs at least as early as 1933.[2] It came into more general use in the elite retail (or "Private Client") divisions of firms such as Goldman Sachs or Morgan Stanley (before the Dean Witter Reynolds merger of 1997), to distinguish those divisions' services from mass-market offerings, but has since spread throughout the financial-services industry. Family offices that had formerly served just one family opened their doors to other families, and the term Multi-family office was coined. Accounting firms and investment advisory boutiques created multi-family offices as well. Certain larger firms (UBS, Morgan Stanley and Merrill Lynch) have "tiered" their platforms – with separate branch systems and advisor-training programs, distinguishing "Private Wealth Management" from "Wealth Management", with the latter term denoting the same type of services but with a lower degree of customization and delivered to mass affluent clients. At Morgan Stanley, the "Private Wealth Management" retail division focuses on serving clients with greater than $20 million in investment assets while "Global Wealth Management" focuses on accounts smaller than $10 million.
In the late 1980s, private banks and brokerage firms began to offer seminars and client events designed to showcase the expertise and capabilities of the sponsoring firm. Within a few years a new business model emerged – Family Office Exchange in 1990, the Institute for Private Investors in 1991, and CCC Alliance in 1995. These companies aimed to offer an online community as well as a network of peers for ultra high-net-worth individuals and their families. These entities have grown since the 1990s, with total IT spending (for example) by the global wealth management industry predicted to reach $35bn by 2016, including heavy investment in digital channels.[3]
Wealth management can be provided by large corporate entities, independent financial advisers or multi-licensed portfolio managers who design services to focus on high-net-worth clients. Large banks and large brokerage houses create segmentation marketing-strategies to sell both proprietary and non-proprietary products and services to investors designated as potential high-net-worth clients. Independent wealth-managers use their experience in estate planning, risk management, and their affiliations with tax and legal specialists, to manage the diverse holdings of high-net-worth clients. Banks and brokerage firms use advisory talent-pools to aggregate these same services.
The Great Recession of the late 2000s caused investors to address concerns within their portfolios.[4] For this reason wealth managers have been advised that clients have a greater need to understand, access, and communicate with advisers about their situation.[5]
Life goals
As awareness of wealth management has become more common, some companies have shifted towards a model which asks clients about life goals,[6] working environments, and spending patterns as a way to increase communication.[7] The industry-recognized wealth management was more than an investment advisory discipline.[8] In 2015, United Capital rebranded their wealth management services using the term "financial life management", which, according to the company, was intended to more clearly define the difference between wealth management companies and more affordable brokerage firms.[9] The same year Merrill Lynch began a program, Merrill Lynch Clear, which asks investors to describe life goals, and includes an educational program for clients' children.[7] For clients looking to leverage their wealth for the sake of achieving philanthropical and charitable goals, social finance investments may be included.[10]
Private banking and wealth management rankings
According to Euromoney's annual Private banking and wealth management ranking 2013, which consider (amongst other factors) assets under management, net income and net new assets, global private banking assets under management grew just 10.8%YoY (compared with 16.7% ten years ago).[11]
The largest private banks and wealth managers in the world as of 2018 are as follows:[12]
^David Teather. Richlists. The Guardian. 25 June 2008.
^Fowler, William Franklin (1933). Fishermen and fish: A sequel to For America, an interpretation and plan. Lynbrook, N.Y: W.F. Fowler. p. 38. Retrieved 2013-01-30. To the inefficiency of political control of government, which is the principal cause of unsound conditions, they would grant the additional authority and responsibility of wealth management.
^Wealth Management Technology Spending Through 2016 (July 2012)
^ Yeh, C: "Investors Challenge Market 'Truths'", CFA Institute Private Wealth Management, August 2009.
^ Costa, L: "Questions Replace Investment 'Truths': A Comment", CFA Institute Private Wealth Management, May 2009. Quote:"This state of affairs poses a dilemma for wealth managers, who, for a generation, have adhered to the core principles of asset allocation and earned their keep by preaching the mantras of 'buy and hold', 'invest for the long term', and when things get tough, 'stay the course'."
^"How can "goals-based" wealth management prepare me for different life stages? - Worth". Worth.
^ abSullivan, Paul (March 20, 2015). "Financial advisers seek to inject a more human element". The New York Times. Retrieved September 17, 2015.
^Welch, Scott, "Perspectives on Serving the Ultra-High-Net Space An Interview with Jean L.P. Brunel and Charlotte Beyer" IMCA Wealth Management Monitor, Jan/Feb 2016
^Gil Weinreich (March 25, 2015). "United Capital's Duran: Wealth management is dead. Long live life management!". ThinkAdvisor. ALM. Retrieved September 17, 2015.
^"Wealth Management: The rise of social impact investing". Deloitte. Retrieved 15 March 2023.
^Annual private banking industry assets under management
^"The 15 biggest wealth managers in the world". Business Insider. Retrieved June 1, 2018.
wealth, management, this, article, needs, additional, citations, verification, please, help, improve, this, article, adding, citations, reliable, sources, unsourced, material, challenged, removed, find, sources, news, newspapers, books, scholar, jstor, june, 2. This article needs additional citations for verification Please help improve this article by adding citations to reliable sources Unsourced material may be challenged and removed Find sources Wealth management news newspapers books scholar JSTOR June 2022 Learn how and when to remove this template message Wealth management WM or wealth management advisory WMA is an investment advisory service that provides financial management and wealth advisory services to a wide array of clients ranging from affluent to high net worth HNW and ultra high net worth UHNW individuals and families It is a discipline which incorporates structuring and planning wealth to assist in growing preserving and protecting wealth whilst passing it onto the family in a tax efficient manner and in accordance with their wishes Wealth management brings together tax planning wealth protection estate planning succession planning and family governance Contents 1 Private wealth management 2 Life goals 3 Private banking and wealth management rankings 4 See also 5 References 6 Further reading 7 External linksPrivate wealth management EditPrivate wealth management is sought by high net worth investors Generally this includes advice on the use of various estate planning vehicles business succession or stock option planning and the occasional use of hedging derivatives for large blocks of stock A wealth management consultation Traditionally the wealthiest retail clients of investment firms demanded a greater level of service product offering and sales personnel than that received by average clients With an increase in the number of affluent investors in recent years 1 there has been an increasing demand for sophisticated financial solutions and expertise throughout the world The CFA Institute curriculum on private wealth management indicates that two primary factors distinguish the issues facing individual investors from those facing institutions Time horizons differ Individuals face a finite life as compared to the theoretically potentially infinite life of institutions This fact requires strategies for transferring assets at the end of an individual s life These transfers are subject to laws and regulations that vary by locality and therefore the strategies available to address this situation vary This is commonly known as accumulation and decumulation Individuals are more likely to face a variety of taxes on investment returns that vary by locality Portfolio investment techniques that provide individuals with after tax returns that meet their objectives must address such taxes The term wealth management occurs at least as early as 1933 2 It came into more general use in the elite retail or Private Client divisions of firms such as Goldman Sachs or Morgan Stanley before the Dean Witter Reynolds merger of 1997 to distinguish those divisions services from mass market offerings but has since spread throughout the financial services industry Family offices that had formerly served just one family opened their doors to other families and the term Multi family office was coined Accounting firms and investment advisory boutiques created multi family offices as well Certain larger firms UBS Morgan Stanley and Merrill Lynch have tiered their platforms with separate branch systems and advisor training programs distinguishing Private Wealth Management from Wealth Management with the latter term denoting the same type of services but with a lower degree of customization and delivered to mass affluent clients At Morgan Stanley the Private Wealth Management retail division focuses on serving clients with greater than 20 million in investment assets while Global Wealth Management focuses on accounts smaller than 10 million In the late 1980s private banks and brokerage firms began to offer seminars and client events designed to showcase the expertise and capabilities of the sponsoring firm Within a few years a new business model emerged Family Office Exchange in 1990 the Institute for Private Investors in 1991 and CCC Alliance in 1995 These companies aimed to offer an online community as well as a network of peers for ultra high net worth individuals and their families These entities have grown since the 1990s with total IT spending for example by the global wealth management industry predicted to reach 35bn by 2016 including heavy investment in digital channels 3 Wealth management can be provided by large corporate entities independent financial advisers or multi licensed portfolio managers who design services to focus on high net worth clients Large banks and large brokerage houses create segmentation marketing strategies to sell both proprietary and non proprietary products and services to investors designated as potential high net worth clients Independent wealth managers use their experience in estate planning risk management and their affiliations with tax and legal specialists to manage the diverse holdings of high net worth clients Banks and brokerage firms use advisory talent pools to aggregate these same services The Great Recession of the late 2000s caused investors to address concerns within their portfolios 4 For this reason wealth managers have been advised that clients have a greater need to understand access and communicate with advisers about their situation 5 Life goals EditAs awareness of wealth management has become more common some companies have shifted towards a model which asks clients about life goals 6 working environments and spending patterns as a way to increase communication 7 The industry recognized wealth management was more than an investment advisory discipline 8 In 2015 United Capital rebranded their wealth management services using the term financial life management which according to the company was intended to more clearly define the difference between wealth management companies and more affordable brokerage firms 9 The same year Merrill Lynch began a program Merrill Lynch Clear which asks investors to describe life goals and includes an educational program for clients children 7 For clients looking to leverage their wealth for the sake of achieving philanthropical and charitable goals social finance investments may be included 10 Private banking and wealth management rankings EditAccording to Euromoney s annual Private banking and wealth management ranking 2013 which consider amongst other factors assets under management net income and net new assets global private banking assets under management grew just 10 8 YoY compared with 16 7 ten years ago 11 The largest private banks and wealth managers in the world as of 2018 are as follows 12 2018 Rank Company HQ Country Assets Under Management AUM 1 UBS CH 2 403 billion2 Bank of America Merrill Lynch US 1 080 billion3 Morgan Stanley US 1 045 billion4 Credit Suisse CH 792 billion5 J P Morgan Private Bank US 526 billion6 Citi Private Bank US 460 billion7 BNP Paribas FRA 436 7 billion8 Goldman Sachs US 394 3 billion9 Julius Baer CH 388 3 billion10 China Merchants Bank CHN 292 8 billionSee also EditMulti family office Private banking Robo advisorReferences Edit David Teather Richlists The Guardian 25 June 2008 Fowler William Franklin 1933 Fishermen and fish A sequel to For America an interpretation and plan Lynbrook N Y W F Fowler p 38 Retrieved 2013 01 30 To the inefficiency of political control of government which is the principal cause of unsound conditions they would grant the additional authority and responsibility of wealth management Wealth Management Technology Spending Through 2016 July 2012 Yeh C Investors Challenge Market Truths CFA Institute Private Wealth Management August 2009 Costa L Questions Replace Investment Truths A Comment CFA Institute Private Wealth Management May 2009 Quote This state of affairs poses a dilemma for wealth managers who for a generation have adhered to the core principles of asset allocation and earned their keep by preaching the mantras of buy and hold invest for the long term and when things get tough stay the course How can goals based wealth management prepare me for different life stages Worth Worth a b Sullivan Paul March 20 2015 Financial advisers seek to inject a more human element The New York Times Retrieved September 17 2015 Welch Scott Perspectives on Serving the Ultra High Net Space An Interview with Jean L P Brunel and Charlotte Beyer IMCA Wealth Management Monitor Jan Feb 2016 Gil Weinreich March 25 2015 United Capital s Duran Wealth management is dead Long live life management ThinkAdvisor ALM Retrieved September 17 2015 Wealth Management The rise of social impact investing Deloitte Retrieved 15 March 2023 Annual private banking industry assets under management The 15 biggest wealth managers in the world Business Insider Retrieved June 1 2018 Further reading EditSpear s Wealth Management Survey Spear s Magazine Spear s Magazine Harrington Brooke 2016 Capital Without Borders Wealth Managers and the One Percent Cambridge Massachusetts Harvard University Press ISBN 9780674743809 OCLC 944339474 External links EditInvestment Management U S Treasury Handbook Retrieved from https en wikipedia org w index php title Wealth management amp oldid 1144751930, wikipedia, wiki, book, books, library,
