Understanding Wealth Management


Wealth management is a branch of financial services dealing with the investment needs of affluent clients. These are specialized advisory services catering to the investment management needs of affluent clients.

What is Wealth Management?

Wealth management is a consultative process. It involves consultations with affluent clients and discussions on their financial needs and goals.

What are the advantages of Wealth Management?

  • Wealth management plans are tailored to client-specific needs. The financial products are combined to reach the client’s financial goals effectively.
  • The advisory services entail the handling of client-sensitive information. Investment advisors must maintain the confidentiality of information obtained during financial planning and advisory services.
  • A wealth management advisor utilizes diverse financial disciplines, such as financial and accounting, tax services, investment advice, legal or estate planning, and retirement planning, to manage an affluent client’s wealth as a bundle of services.
  • Wealth management practices and the related services may differ from one location to another, depending on the state of the economy, per capita income and saving habits of the people.
  • Wealth management is different from investment advice. The former is a more holistic approach in which a single manager coordinates all the services needed to manage their money and plan for the client’s needs, including the current and future needs of the client’s family.
  • While most wealth managers provide services in any financial field, certain wealth managers specialize in specific areas of finance. The specialization would be based on the area of expertise of the wealth manager.
  • Wealth management services are usually appropriate for wealthy individuals who have a broad array of diverse needs. The advisors are high-level professionals and experts.
  • Wealth managers may work individually as a single person, as part of a small-scale business or as part of a larger firm. Based on the nature of the business, wealth managers may function under different titles, which include financial consultant or financial adviser. A client may receive services from a single designated wealth manager or may have access to the members of a specified wealth management team.

What is Investment?

Investment also includes money committed into a new business venture for expanding an existing business, purchasing interest or share in a business, or investing an asset in a business. The purpose of investment is to make your money work for you or let your money grow.

There is always an element of risk associated with an investment. Risk is the likelihood of securing the return on the amount invested. The risk is low in cases such as investments in government securities. The risk is high in investing in stocks, new business ventures, business expansion, and so on.

Investments can be broadly categorized into:

  1. Fixed-income investments such as debentures and bonds bear a fixed return percentage, such as interest.
  2. Variable income investments, such as equities and real estate, do not provide a fixed return annually. The dividends or rental payments vary each financial year. And their value appreciates in the long term.