Wealth Management

The term Wealth Management is often quoted but what does it mean and is it of any relevance to today’s investors?

Wealth Management started life as a marketing term and has only become an established service over time. Broadly, most organisations would define Wealth Management as the combining of previously disparate products and services in a co-ordinated manner more effectively to further a client’s wealth creation and preservation.

Many clients would take for granted that their advisers would be working to some sort of plan and in harmony but, very often, that was not the case. It is possible that the stock broker or investment manager would be taking no account of the tax implications of their advice or of the client’s attitude to risk. The tax adviser may well have been blissfully aware of any investment planning needs and the pensions adviser could have been acting completely at odds with everyone else.

Clearly, it makes sense to have all the elements working in harmony and this is where the Wealth Management team step in, much like financial project managers. Like many things in the financial world, Wealth Management started with the very rich and filtered down so that the processes can benefit those of more modest means. In fact, many seeking financial advice will not have many, if any at all, of the individual elements but will still benefit significantly from the techniques of Wealth Management.

Understanding, for example, the interplay between tax and investments can improve the efficiency of many financial plans. Fitting investment management to a client’s objectives and attitude to risk are now seen as essential in successful planning and the application of outcome modelling software is being added to the repertoire of many Wealth Management firms.

How does this translate to the needs of clients?

Firstly, they will know, better than ever before, the potential impact of the many decisions they face.

Secondly, their investment structures will be very much more transparent and they should feel more in control than they would have previously. This engenders confidence, which leads to a more comfortable journey.

Thirdly, their planning may be far more efficient than it was. Making small, incremental improvements in, for example, tax and charges can make a huge difference in the likelihood of a happy ending. They may also be able to take less investment risk, for instance, than would have been necessary.

Investors today definitely have more choice than ever before and usually have more money at their disposal. Balanced against this are the increased complexity choice brings and the problems associated with increasing longevity and higher expectations. Far fewer people have the comfort of secure Final Salary pension schemes nor would they a generation ago have expected their estates to be of any significance. They require a sophisticated approach to their finances and require information to help them to gain more certainty in their planning.

The problems of modern times require a different approach from before as many more find themselves with being classified as relatively wealthy. Wealth, of course, is relevant but there is no denying the fact that as a Nation we have become more prosperous than ever before.

This is why, more than ever, we hear the term Wealth Management and why it is of growing importance.