If you would describe yourself as ‘affluent’, or in modern parlance as an HNWI (High Net Worth Individual), wealth management could be vital to your future finances. Unless you are a financial professional, you can’t be expected to have a grasp of all the investment, accounting, tax, legal, inheritance and residence laws which might affect you and your family’s wealth. The advisory service of a wealth manager is a consultative process, designed to explore the client’s assets and needs, to tailor a strategy using appropriate financial products and services and to manage assets for a fee.
But managing your finances is more than just investment advice—it covers all aspects of financial life, integrating the advice of many different professionals into one single management service. This doesn’t mean that wealth managers operate alone—they will certainly still need to work with your lawyers, accountants and so on. But a manager can offer so much more, from banking services to advice on philanthropic projects.
Choices in Wealth Management
In choosing a wealth manager, there are certain basic rules. Firstly, never believe claims for guaranteed returns—no reputable manager would make them. Investment advice website Guidevine says “Returns should only be guaranteed by governments, agencies or corporations, and even then, their guarantee is only as good as their financial soundness at that time.”
The same applies to promises of steady returns—they may be guaranteed in the bonds market, but certainly not in the stock market—or to any suggestions that past performance can guarantee future results. The most essential point is that your manager should always be able to explain clearly how your investment will produce returns. Of course, you aren’t obliged to take your wealth manager’s advice—for instance one working in a banking arena may be expert in trust, credit and insurance options, while another in an investment market may specialise in market strategy. In either case the function of the wealth manager is of a consultant rather than a decision maker.
Planning
Whether they work in a small or a large team, and under the title Wealth Manager, Financial Consultant or Financial Adviser, a wealth manager starts by developing a plan that will maintain and increase a client’s wealth based on the current financial situation. End goals and the client’s comfort level with risk should be discussed in developing a plan, and regular meetings to update the goals, balance the financial portfolio and discuss additional services are to be expected. Properly executed, wealth management should be a lifetime commitment, its aim to enhance the income, growth and tax-favoured treatment of longterm investors.
This feature was originally published in the spring edition of Arts and Collections, which you can also read here.
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