Topics Covered Hide
- 1 Understanding the concept of wealth management
- 2 Finding the perfect wealth management company
- 3 How much money you will need for wealth management
- 4 Fees required by a wealth manager
- 5 Generally speaking, the fees will be commission or asset-based.
- 6 Think about sale loads as well.
- 7 Most popular strategies in wealth management
- 8 Benefits of relying on a wealth management firm
- 9 Conclusion
You have probably heard about wealth management – maybe spotted a few businesses too in top-rated areas. The concept makes perfect sense, but there are certain misconceptions that can change everything.
In theory, a wealth management company provides investment management, as well as detailed and professional financial advice. A personal manager will deal with complex financial situations, not to mention coordinating financial experts based on the clients’ necessities.
When it comes to financial planning services, wealth management is probably the most advanced one. This is the ultimate goal. Investment management is probably the most common service, and it comes from people with decades of experience.
Tax guidance is another common service, not to mention estate planning or perhaps legal assistance with certain aspects of your wealth. Such services are usually suitable to wealthy individuals, of course. Even if you may not need them now, things could change in the future.
Understanding the concept of wealth managementTo some, wealth management may look like investment advice, but things go way further than that. The concept will also encompass every single part of your financial life should you ever need help. If it involves money, you need to consider it.
Now, there are two different approaches to wealth management. Some wealthy individuals will integrate more types of advice and different products from different professionals – not always the healthiest approach.
The other option involves opting for an integrated approach. You are more likely to benefit from such a management system. A wealth manager will handle all the services required to meet your needs. You may still deal with more experts, but they are all coordinated by the same manager.
The same wealth manager will aim to manage all the assets, while also creating successful strategies to meet your current plans and long-term needs. It makes no difference if you struggle with trust services or business succession, among others.
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Many managers will be able to offer advice in pretty much any financial aspect. However, you can also find specialized professionals. They tackle specific areas only – for instance, cross border management of wealth.
It depends on the manager’s expertise and education, as well as the main focus of the business.
In some particular cases, wealth managers might need to coordinate data from other financial experts you are associated with. For example, your attorney or perhaps your accountant may need to cooperate with the wealth manager in order to help them craft the right strategy.
Then, you can also find experts helping with philanthropic activities or perhaps banking needs.
Finding the perfect wealth management companyIn theory, you need to follow the same rules, regardless of what you need help with. For example, whether you need a plumber or a wealth manager, you want someone who has started working decades ago.
You want someone with experience and a plethora of good reviews. Obviously, your research is deeper when it comes to finding someone to handle all your money. There should be no room for guesswork – ask, check and verify everything.
Now, one thing in particular when trying to find a wealth manager is how they are paid. You can figure it out yourself or simply ask. Designations or credentials are just as important in the process – again, you must ask about everything.
Ideally, you should work with a fee-only fiduciary. Other types of experts are also supposed to do a good job, but this is a general rule of thumb. What does it mean? Simple – you pay such an expert directly, based on the services they provide.
Need wealth management for a large pay-out event like a business sale, inheritance, or divorce
Have between $5 million and $500 million in liquid investable assets…
Then we may be just the wealth managers you’ve been looking for.
At the same time, they cannot receive payments or compensation from various institutions – such as banks – for recommending particular services. If they do, they are less likely to put your needs first. If they do not, you should be the primary focus – it is a legal requirement.
When it comes to the technical aspect of the search, different countries have different laws and requirements. For example, many wealth managers are registered as investment advisors in the USA. It might be worth finding a certified financial planner instead – also known as a CFP.
A CFP has the strictest and most difficult certification for financial services. A fiduciary standard will also determine the way such professionals must do their business. A CPA – certified public accountant – is also a good idea. The two will work wonders together.
A CPA is your primary choice if you need help with your tax. Obviously, you can find wealth management companies gathering together experts from more fields – you might as well find a firm with both CPAs and CFPs.
How much money you will need for wealth managementTo keep it simple, you need a lot of money to be considered by a wealth management firm. Sure, you can go in and ask anyway, but based on your needs, there will be some minimum requirements. At the end of the day, it depends on what you need help with.
Normally, you are less likely to be considered for $10,000 or $100,000. Account minimums are usually steep and may surprise you. For instance, you could get a private wealth management service – a team of financial experts at your disposal – without too much hassle if you have $10 million in your account.
On the same note, different companies offer different services. A company with such impressive requirements may also provide simple wealth management services, where you only have to work with a single advisor – you could find such a service with only $250,000 in your account.
It may seem a bit weird to walk into such a company and ask for the requirements, then say thank you, turn around and leave. It is embarrassing. Most of these companies provide requirements over the Internet – if there are no such things, you can always drop an email, rather than go in person.
Fees required by a wealth managerCharges vary widely from one expert to another. Some experts operate as fee-only advisors. Basically, they will charge you per hour or maybe per month or year. They can also ask for flat fees based on the service you need help with.
Then, there are also advisors working on commissions. They are paid based on the investments they make. It is practically a mix of fees and commissions. All in all, understanding advisor fees will help you get a better idea.
Such fees will be charged for a wide variety of services. Many times, these fees represent one of the factors in your decision. Besides, they can also represent a key factor for deciding on investments. For example, a wealth manager may also seek fees when dealing with brokers or dealers on your behalf.
Generally speaking, the fees will be commission or asset-based.Current innovations in the financial technology industry have brought in plenty of management options for wealthy individuals. There are more services than ever out there. At the same time, the industry has grown extremely competitive – an obvious impact on the fees as well.
Fees at wrap accounts are normally lower compared to other services because there is less personal attention involved. Then, personal financial managers are run by a fiduciary responsibility, so your interests come first. They must go the extra mile to ensure good long- and short-term results.
Such advisors are likely to charge more than others.
A personal financial manager will provide more services than wrap accounts, hence the higher fees. For example, get ready to pay around 0.25% for wrap accounts and over 1% for a premium service. Watch out for transaction fees, which may not always be included in the basic fee quotes.
Moving on to transaction-based fees, they are sometimes referred to as commissions. Such fees are considered for full-service transactions. Basically, brokers working on commissions have legal obligations regarding suitability standards.
Think about sale loads as well.Such things can be taken for advisor fees, as they come out based on the advice and interaction with a broker. Such fees are separate and can easily add to your personal expenses, so make sure you ask upfront.
Bottom line, most wealth management firms will charge around 1%. Many advisors will charge more than that if the account balance is small, but also less if the account balance is big. The point is they try to make the same amount of money, regardless of your balance.
The more assets you have, the less you will pay in fees – simple as that.
Most popular strategies in wealth managementThere are lots of different investment strategies out there. Each company will try something different. At the same time, your unique circumstances are just as important. At the end of the day, you must agree on the investments your advisor recommends, as well as long-term decisions.
Different advisors will come with different strategies in order to add to your wealth. The most popular one? Exactly – investing. Growth investing is Warren Buffett's favorite strategy and a common choice among advisors these days.
Now, this strategy has different approaches. Managers bring it in differently, as they work with large accounts. You will have to discuss potential investments with a financial advisor to make more informed decisions.
A wealth manager will provide more opportunities than a regular financial advisor – even if they do pretty much the same thing. For example, a wealth manager will also give you access to private equity deals, as well as hedge funds.
A wealth manager also tends to be more holistic. Basically, the plan is not just about your investment. Instead, it covers everything related to your personal life, too – tax planning, estate advice, and other similar services.
No matter what strategy a wealth manager will employ, it is imperative to match your particular financial goals. Furthermore, there is obviously a risk tolerance on your side. Different circumstances ask for different plans.
For example, if you are close to retirement, there is no need for risky growth investments anymore. Instead, you need to shift the focus and go for safer investments. After all, you need to maintain the wealth and – hopefully – increase it. Maintaining it is the main goal, though.
A good wealth manager will also understand that the higher your net worth is, the more complex your necessities will be. This is one of the most significant considerations when assessing the right strategy for your needs.
On the other hand, if you count yourself in this category, you should also make sure you choose the right wealth manager. You need to ask questions and understand every single aspect, but also ensure the manager can help with everything you need – investments, tax, estate, and more.
Benefits of relying on a wealth management firmThere are more reasons wherefore you could do with a wealth management firm.
A professional will execute investments, but also keep an eye on them and monitor the situation round the clock. Each strategy is thoroughly analyzed – they know when to buy, but also when to sell in order to bring in some profits. Everything is managed on your behalf – including adjustments when needed.
A wealth management firm is a one-stop shop for all your financial needs. Such a firm will provide a fully integrated solution. Investments, estate planning, tax planning, retirement optimization – you name it, such a service will bring it in.
It pays off hiring one service for all your financial needs, rather than dealing with more experts.
Some of the world's best-rated asset managers or wealth managers have access to exclusive materials. Access to information often makes the difference. These managers know things that others do not, so their decisions are much better.
For example, you can get an insight into certain company shares or perhaps stocks that are about to become available. Difficult information is hard to access, but an old fox has the right channels to access it through connections.
Experience and education
You clearly know what you are doing. At the end of the day, chances are you have made most of the money with smart investments. Sure, there is also the category of people born into wealth – no training or education whatsoever.
No matter which category you are part of, a wealth manager has spent their life learning and practicing. Expertise is a critical advantage. The education and knowledge brought to the table will outweigh your experience and can be adjusted to match your needs.
The expertise will also ensure a wealth manager can profile you based on the initial consultation. A professional will understand your needs, fears, and thoughts throughout the consultation. Your wishes and specifications are not enough – an expert must also assess your risk tolerance and capacity.
Based on all these things, assets will be allocated accordingly – currencies, metals, stocks, commodities, bonds, and so on. Sure, the final decision will always belong to you, but be open to advice and suggestions – they come from years of experience.
Time is another great benefit. An asset management service will save you lots of time. It takes months or years to educate yourself. It takes hours a day to research the market data, not to mention executing transactions.
Even if you are well experienced, you still require time and effort.
Disadvantages of relying on a wealth management firm
Obviously, just like any other service, wealth management is not perfect.
Wealth management is meant to be profitable. Basically, you pay someone to maintain, manage or multiply your money. But this service is not free and comes with a cost. The expense associated with wealth management is probably the most significant disadvantage.
All the charges and fees will cut into your profits. When requesting a quote, make sure it is comprehensive. Ask if you are not sure about something in particular. Every single cost must be discussed in the smallest details.
An actively managed investment strategy implies having a manager buying or selling to make profits. This strategy is rarely more successful than a traditional market index. This is the reason wherefore many managers also include passive investment options these days – such as ETFs.
Now that you understand how wealth management works, its requirements, benefits, and disadvantages, what are the top players on the market and why? There are lots of options out there – both international and local companies. Some of them stand out in the crowd.
The offshore market has experienced massive growth over the past years, and Appleby is one of the names behind this development. Clients can benefit from an impressive range of services – from mutual and hedge funds to investment schemes and all sorts of financial services.
The company brings together over 50 lawyers, many of them working in tax havens suitable for offshore entrepreneurs, such as Bermuda, the Cayman Islands, or the British Virgin Islands. Further offices are established in other financial centers, such as Shanghai – China – or Hong Kong.
Asiaciti Trust is a popular choice for both corporate and private clients. The company has multiple offices in Panama, New Zealand, Hong Kong, and Singapore, among others. It has been around for over four decades, gathering together lawyers with experience in more financial fields and industries.
Asiaciti Trust offers specialist administration and fiduciary services to corporations and individuals, not to mention intermediaries. The company has a great reputation and aims to develop long-term relationships based on seriousness and profits. The clients' best interests are the main consideration.
Southpac Group offers more types of support in terms of global wealth management – no matter what jurisdiction you come from or what your goals are, chances are you will find some helpful lawyers who can keep you on track and help you maximize profits – almost four decades of experience.
Southpac Groups has connections with professionals in more global financial markets and jurisdictions, so the client’s location is irrelevant. Over the past decades, the company has gained notoriety as a trusted advisor. The company’s goal is to protect and improve the lifestyle you have worked for.
Sovereign Trust dominates the market by managing more than 20,000 structures. The company is specialized in client and corporate services, as well as retirement planning. The assets in administration exceed $20 billion. Corporate services seem to be more popular among the company’s clients.
In terms of retirement planning, the service offers pension schemes that provide tax efficiency, transparency, and multiple choices. Jurisdictions are quite diversified too and include China, Hong Kong, Singapore, Cyprus, Malta, the UK, the Bahamas, and Mauritius, among many others.
Vistra aims to help you make the difference with your personal wealth. It makes no difference what your goals are. You could be providing a solid base for the next generation, or maybe you want to support the local community. No matter what you care for, the firm will follow your goals with your needs in mind.
Vistra is known for gathering together a team of experienced lawyers. It is a flexible firm that can protect wealth and make things even greater. Take advantage of the possibility to create an opportunity, preserve your wealth, and ensure your legacy. Locations are extremely varied – over 30 countries.
Credit Suisse was established in 1865, and its role was to support the local rail system. Today, it is one of the strongest financial institutions in the world and suitable to those who deal with millions. The Swiss company is so strong that it was not even affected by the most recent financial crisis.
In terms of wealth management, clients have the opportunity to preserve, accumulate or transfer their wealth. Basically, it makes no difference what your interests are – this company has experts with decades of experience to help out. It is not suitable to those in the USA, though, due to the harsh local laws.
Charles Schwab has more than 300 offices in the USA and employs more than 2,000 wealth managers – you can tell it has an impressive customer portfolio. It was only established in 1971, but it grew to become one of the most reputable institutions in the USA over the 1980s, showing impressive growth.
These days, Charles Schwab offers a wide variety of wealth management services through an exceptional team of advisors. This section of the company will offer guidance with your estate, insurance needs, or retirement income planning, among other related services.
Julius Baer is not among the most popular wealth management firms in the world because its goal is to keep things secret. However, it is a popular choice among millionaires. It is named after a Swiss banker and was originally a classic private bank. Its goals have slightly changed overtime.
These days, Julius Baer is present in about 30 countries. Its banking secrecy is its primary benefit. It guarantees a high level of confidentiality and manages assets for clients from all over the world. Wealth management services are extremely diversified. Requirements are quite high, though.
The international banking group is based in France. Believe it or not, it is one of the largest banks in the world based on total assets – as well as the largest in Europe. It is available in over 70 countries, and it gained notoriety while growing throughout the 2008 financial crisis.
Wealth management is one of the primary sources of income. The division is world-renowned for its professional and profitable investments. After all, BNP Paribas affords to employ bankers and lawyers with years of experience in this industry. Such services apply to both institutional and corporate clients.
Citi Private Bank
Citi Private Bank is open to professionals, wealthy individuals, families, and even law companies and lawyers. The company aims to maintain a high ratio of individual advisors and managers to ensure each client gets plenty of attention – quality is just as important in the process.
The company has dozens of offices in over 20 countries. It is worth noting that Citi Private Bank deals with high-net-worth individuals – the usual requirement is $25 million or more. This rule is out for qualified individuals or law firm clients, so it is worth contacting the bank anyway.
Other firms worth some attention include:
- Morgan Stanley
- Bank of America
- J. P. Morgan
- Goldman Sachs
- Edward Jones
- LGT Group
- J. Safra Sarasin
- Wells Fargo
- LGT Group
ConclusionAs a short final conclusion, wealth management is, indeed, a solution. It may not be the time right now, but as you work towards your wealth, it can become a viable option later on. Educating yourself on this matter is a must, regardless of the current status.
Wealth management can go in more directions and may include investments for further growth, but it can also include estate planning or perhaps tax considerations. Different individuals have different needs – you need to assess your current and future goals before making a decision.
Requirements vary widely from one firm to another, as well as the services offered.