Have you ever noticed how we perceive rich people? Our natural assumption about them is they get everything in life so easy as they have a lot of money. It is true, money can make your life easier. It has the power to bring all the luxuries and comfort in your life. But while this big money dazzles your eyes, those who have it have a host of issues to worry about. Having a lot of wealth is not a care-free status at all. One has to work to ensure that one's wealth stays safe and at the same time keeps appreciating, all this while walking the tightrope of the tax planning.
Your Wealth Needs Managing
Wealth management is the solution for the aforementioned issues. It is a service which comes as a bundle for all your financial needs like investment advice, tax planning, asset allocation, etc. There is a good reason people usually confuse wealth management with investment planning, but these two are distinctly different from each other. Your investment planner will just help you with picking up right stocks market tips or finding good mutual funds while a wealth manager does this and a lot more.
Let's try to understand the concept of wealth management through an examp
Imagine you are a 40-year-old man with the assets worth 25 crores. Now the question staring at your is how to keep this wealth intact and at the same time how to get a decent appreciation on it. Here a wealth manager comes into the picture. A wealth manager will take stock of all your financial requirements of present and future, current cash flow, assets' assessment and will also review the investment portfolio of clients. Here the challenge before the wealth manager is not just directing the client to the right investment instruments, but he/she has to ensure that all the asset allocation is in the perfect sync with the market. Unlike investment planner, a wealth manager can't just think of high returns, preservation of assets is of equal importance in this domain. Another facet of wealth management is tax planning and setting up an orderly estate.
Role Of Your Wealth Manager
There is a trend in the financial world these days - everyone calls himself or herself a wealth manager. Some also resort to the terms like 'financial advisor' or 'money manager', even if their roles are totally different. People often confuse wealth management with investment management. However, there is a sea difference between these both streams. A role of investment planner is to advise his/her clients about stocks, bonds, exchange-traded funds (ETF), mutual funds, etc. On the other hand, the role of a wealth managers is far more evolved and layered. To understand a wealth manager's scope of works, here is a list of responsibilities he/she has to focus on.
They have to Interview clients to understand their income and expenditures, insurance cover (life, health, etc.), tax return status, present and future financial goals and also their risk appetite. They also have to answer their clients' questions about the plans and minor details of financial plans and investment strategies, etc. A wealth manager has to recommend effective strategies for cash management, has to strike a perfect balance in asset allocation and investment planning and assist his/her clients to achieve their financial goals.
Who Provides Wealth Management Services
In India, there are three main types of wealth management service providers i.e. banks, brokerage firms and advisory firms. All the major banks in India i.e. HDFC, ICICI provide wealth management services to their clients. Apart from them, full-service brokerage firms and independent advisory firms also provide these services. As banks and brokerage firms have a huge client base, it is not always possible for them to provide a personalized service. However, advisory firms can give extremely personalized and customized service to their clients.