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What Is Wealth Management? Research Team | Posted On Wednesday, January 30,2019, 03:24 PM

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What Is Wealth Management?



Wealth Management is a systematic process designed to keep you on-track to achieve financial goals. It focuses on what is important to you and your family or business. Wealth management provides options to invest your money to earn returns. Wealth manager is one who has expertise in wealth management.

Wealth management process

The process of wealth management involves the following:

1) Discovery: Gather information related to finance like tax returns, financial statements of investments including credit and mortgage details. Make sure to understand goals for retirement, investment horizon and time horizon to achieve financial goals.

2) Documentation: Collect all documents related to financial accounts and agreements. This would come in handy when you want to understand the requirements and investment horizon.

3) Creation of a Plan: This includes the following:

·       Details on how to achieve goals.

·       Developing individual plans

·       Analyzing personal financial details

·       Use of appropriate strategies

·       Action plans to achieve goals

4) Insurance Review and Family Wealth Transfer: A wealth manager would review current life and disability insurance covers and provide advice on recommended insurance policies for wealth protection.

5) Other Planning: Wealth manager would refer you to tax accountants, lawyers, mortgage specialists and banking individuals to guide you on important things that are out of his/her scope.

6) On-going Reviews: Regular reviews are critical to the success of any plan. The objectives that have been exclusively identified need to be maintained and regulated throughout the plan.

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What Is Wealth Management? 

Private wealth management

Private wealth management services are offered by banks and large brokerage houses, independent financial advisers and multi-licensed investment managers who focus on high-net-worth individuals HNIs, and family businesses. 

Most private wealth management firms are smaller groups within larger financial institutions that focus on providing customized financial services to clients. Their main objective is to manage and build on the assets of clients. These groups generally have a wide range of advisors and expertise who guide clients on their investments. They create a portfolio of assets that meet clients’ risk tolerance by offering an opportunity for wealth growth. Private wealth management firms are fee-based. They charge a certain percentage of clients’ assets under management, AUMs.

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Wealth management in bank

Wealth management is a part of retail banking offered by banks. Under wealth management in a bank, you would be investing your money in bank deposits like term deposits and fixed deposits and earn interest over time. Apart from these deposits, wealth management in a bank involves the following:

1) Portfolio Analysis

An in-depth analysis of investment holdings across all portfolios is done by banks. This includes holdings across different portfolios in different capacities of assets classes, industries, currencies, regions, market capitalizations and product categories.

Portfolio Simulator

The simulator is a scenario based planning module which offers assistance to analyze an Investment Portfolio. It basically describes the impact of a redesigned portfolio. It provides mock investments on customers’ portfolios and shows results instantly - in terms of various parameters like asset allocation, industry and market capitalization (for equity component), instrument analysis group and so on.

Portfolio Performance

Portfolio performance helps in tracking return on investments and analyzes the performance of your investments on a regular basis.

You can track portfolio performance under 3 categories:

  • Type of portfolio
  • Instrument Group
  • Asset Class (like equity or debt)

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Wealth management assets

Asset management is related to the management of assets and investments like shares and stocks, bonds, real estate, mutual funds and other assets. Wealth management firms would manage all your assets and offer leads to professionals who deal with other financial services like tax consultation and optimization, retirement planning and real estate.

Wealth management versus investment banking


Wealth Management

Investment Banking


Wealth management offers financial services and advice to individuals.

Investment banking mainly offers financial services and advice to corporate entities.

Main focus

Individuals and families

Corporate bodies


Not so focused on investment.

Clients are made to invest directly.

Primary goal

Managing the wealth of clients

Raising funds for a company


Charge a fee which is a certain percentage of wealth under management.

Depends on the appreciation of your investment at the time of withdrawal.

Advantages of Wealth Management

Following are the advantages of wealth management:

1. Expertise

The primary advantage of wealth management is the expertise which asset management firms offer to clients. They offer tailor made plans to enhance the wealth of clients.

2. Executing and monitoring investments

Wealth management firms are responsible for the execution and monitoring of all investment strategies. They know exactly where and when to invest. Investment portfolios will be monitored and restructured (adjusted) if and when required.

3. Exclusive access

Few wealth management firms offer exclusive access to investment options which are not available through other firms. These include shares of a specific company, initial public offer (IPO), or difficult-to-access information or consultation.

4. One - stop solution

A major benefit of asset managers is that they provide integrated and full-service solutions. Wealth managers not only make investment decisions but provide references to professionals who deal with other finance-related services of tax consultation and optimization, retirement planning and real estate.

Wealth Management Example

Consider the following scenario. Mr Ram wants company XYZ to manage his wealth. His total wealth is Rs 1 Crore. He offers risk tolerance of 5%, which sums up to Rs 5 Lakhs. Company XYZ would invest Rs 5 Lakhs in a scheme which offers good returns. Even though he suffers a loss, Mr Ram would not mind as it’s within risk tolerance. The investment maybe made in equity, gold, mutual funds or any other scheme.

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