Ever wondered from where did the word “wealth” derived from? Well, it has derived from the old English wela, which is from an Indo-European word stem. “Wealth” can be defined as the abundance of valuable resources or material possessions. If an individual has abundance of wealth, then he should also know how to manage it. Here, wealth management plays a diversified role. The concept of wealth management these days has a lot of importance as in the banking sector where many banking companies are engaged in the business of wealth management these days.
What is wealth management?
Wealth management is an investment advisory discipline that incorporates investment portfolio management, financial planning and a number of aggregated financial services. Wealth management is done by wealth managers. The wealth managers can be MBAs, CFAs, certified financial planners who work to enhance income and growth. The concept of wealth management is based on the long-term relationship with the customer.
Features of wealth management
The wealth management is an integrated process of helping clients manage their wealth. Let’s look at the main features of the wealth management.
Ø Wealth management allows the customers to review risk profiles.
Ø It captures customer’s details and risk profile.
Ø Wealth Management also allows customer to track holdings against model portfolio for returns.
Ø Wealth Management also provides for dynamic search.
Ø On approval by client, wealth management executes financial plans.
Ø They also provide education, insurance and tax coverage based on the advanced algorithms.
Wealth management services
Wealth management offers diverse services related to insurance, investment, retirement planning, asset protection, wealth transfer and estate planning. Making the right use of wealth management can definitely be fruitful for any business.
Services offered are as listed below:
Insurance Planning: The very crucial part of any individual is insurance. It’s very important to plan your insurance needs. An independent certified planner will assess your case and suggest the best possible insurance plans.
Estate Planning: This area of service will include all your property and estates. It also includes assets planning projects, your estate from lawsuits and creditors. It also helps in saving taxes.
Retirement Planning: Retirement Planning involves assessing your future financial needs as to how much money would you require during your old age.
Investment Planning: This type of service under wealth management includes investments in diversified markets.
Tax Planning: This area of service is all about lowering your tax returns. An independent professional or an expert will design strategies to increase relief and tax benefits. They know how to plan charity and apply for tax exemptions. Thus, you will be able to support a cause and save more money in the form of taxes.
Wealth Transfer: Wealth management also helps you in transferring your wealth to your legal heirs or other beneficiaries after your death. It includes tools like trusts and wills.
Asset Protection: This type of service involves your financial advisor trying to understand your preferred lifestyle and then helping you deal with threats like volatility, taxes, creditors and lawsuits, inflation to maintain their lifestyle.
Business Planning: Business planning service aims at optimizing the tax free advantages of running your own business.
Advantages of wealth management
Benefit in estate management:With the help of wealth management professional, it is possible to manage the estate. The term estate management is a task to provide objective administration of our funds tailored to aim in responsible protection and distribution of our overall estate.
Helpful for Indian economy: The banks which are engaged in business of Wealth Management earning revenues from the foreign countries like outsourcing for economy.
Aids in choosing investment strategy: Another benefit from the customer point of view is that with the help of wealth management professional the customer can easily know the investment strategy and analyse the return and risk.
Improves yields: The main advantage of wealth management is it improves yields with more diversification and less risk.
Manages liabilities: It helps in managing liabilities like mortgages and college funding.
Disadvantages of Wealth Management
Do not show actual position: The major drawback of wealth management is that they do not show their actual position to their customers. Thus, there may be chances of forgery or fraud with customers.
Lowers the scope of management: It is a misconception that only rich people can benefit from wealth management and poor, middle and lower class cannot enjoy the privileges of the same. Thus, wealth management reduces the scope of management. It has to be understood that even poor, middle and lower class people can enjoy the benefits associated with wealth management.
Customers do not know the actual market position: Most customers are not aware of the actual position of market as everything is taken care of by wealth management professional. Thus, that results in inflation and also there may be chances that customers are at risk but they show false return.
Thus, wealth management helps individuals determine their financial goals and also develop strategies that would encourage them realize their goals.
