pink ceramic piggy bank over a grey background

Definition: Wealth Management is an advanced investment advisory discipline that incorporates financial planning and specialist financial services. The key objectives are to provide high net worth individuals and families with tailored retail banking services, estate planning, legal resources, taxation advice and investment management, with the goal of sustaining and growing long-term wealth.

Whereas financial planning can be helpful for individuals who have accumulated wealth or are just starting to accumulate wealth, one must already have accumulated a significant amount of wealth for the wealth management process to be effective.”

Differentiation between investment advisors and wealth managers

In general, investment advisors are perceived as transactional, while wealth managers are considered more consultative in their approach. In general, investment advisors are perceived as focused on short term results, while wealth managers are devoted to developing long-term relationships.

    1. Benefit:

Benefits of a wealth management practice accrue to both clients and advisors. From the client’s perspective, convenience and single-point accountability are often mentioned as benefits. From the advisor’s perspective, greater client loyalty, increased assets under management (AUM), increased fees from non-investment advisory services, and greater intellectual and emotional satisfaction are touted.

  1. About percentages and money

The Wealth Management Edge,” conducted by CEG Research and sponsored by Dow Jones, revealed that wealth managers controlled an average of $645 million of assets, while investment generalists managed only $308 million. Furthermore, wealth managers enjoyed an average net income of $881,000, compared with $279,000 for generalists. On the other hand, the same study indicated that: “scant 6.6% of the advisors surveyed actually employ wealth management’s fundamental tenets—a surprisingly low figure, especially considering that the group represented the country’s top financial advisors.”
The main issues
So, what exactly sets the best wealth managers apart from the rest? Although the various studies and anecdotal evidence do not always agree, here are the key best practices that emerge.Segmentation—Top wealth managers segment their client base and then focus on their top clients. This means that the top wealth managers spend more time and cultivate deeper relationships with fewer clients than do investment advisors or less successful wealth managers. It’s a classic example of how less is more. Instead of trying to satisfy a few needs of 300 plus clients, the top wealth managers demonstrate the courage to offer holistic services to only a handful of clients. Client Sourcing—Not surprisingly, the top wealth managers source most of their new clients from existing clients and other professional advisors who also service those clients. Top wealth managers proactively seek contact with their clients and their professional advisors and use those contacts as opportunities to not only provide value, but also to ask for introductions to prospective clients in their focus market. By contrast, the less successful wealth managers tend to rely more on less effective strategies such as seminars, advertising, direct mail and cold calling to source new clients. Branding—While most wealth managers do a good job creating and articulating branding messages, only the top wealth managers actually “walk the talk.” Not only is their branding message reflected in how they describe what they do for clients in casual and professional settings, it is reflected in the systems and processes they use in their practices. The top wealth managers use a consultative sales approach, have developed relationships with internal and external tax and legal experts, and tend to outsource money management services to professionals. They structure formal and frequent reviews with clients in order to re-evaluate changing objectives and family dynamics. Strategic Business Management—The most successful wealth managers tend to view their practice as a business, not merely a source of income. Accordingly, they tend to take a more long-term approach. They engage in regular planning meetings to scrutinize the effectiveness and efficiency of existing processes and plan for the future. The top wealth managers manage not just to revenues but to profits. Put the Client First—For the top wealth managers, putting the client first means more than mere compliance with existing laws and regulations. It means individually tailoring each client’s investment portfolio, estate plan, or tax strategy to achieve mutually agreed-upon objectives. It means not merely disclosing, but avoiding conflicts of interests. It means being on the look-out for new opportunities and taking the initiative to present them to clients. It typically means shifting to a fee-based compensation structure that makes it easier for clients to see what they are paying for and what they get. It eliminates the tension inherent in a transaction-based compensation structure.

Faroul KADRI


BONDS & SHARES is a participatory non-Profit information platform for, through and by experts in finance and business. For more information please visit www.bonds-and-shares.com

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Bonds & Shares is a participatory non-Profit information platform for, through and by experts in finance and business.



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