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Understanding Wealth Management
People hearing the word “wealth” generally take this to mean lots of cash. In reality, wealth is about much more than the numbers in a bank account. A wealthy person will often have a fairly complex financial set-up which will involve “assets”. Assets are basically anything that is owned by a person or company that has monetary value. These assets will hold the key to a person’s wealth and it is important that these assets are managed accordingly to make the most of financial markets and investment opportunities. Managing these assets will involve wealth management.So what is wealth management? Well, it is exactly what it says it is – the managing of people’s wealth. Those that work as wealth managers are highly trained to provide their clients with full comprehensive financial support, this can include anything from advice on investments in the property market to ensuring taxes are in order.
Obviously, the majority of us will have no need for wealth management. Those that do, will generally own financial assets of over £1 million – business owners, celebrities, entrepreneurs, lottery winners, etc. These people are often referred to as ‘HNWs’, or high net worth individuals. People with such large amounts of wealth will need to have a good relationship with a wealth manager, as advice given by them will impact upon that person’s whole life.
Wealth management is provided in two ways: discretionary and non-discretionary. Clients will have the choice of which they prefer.
Discretionary is basically the handing over of finances to the bank for management. They will then take on the responsibility of protecting and expanding wealth, through various investment opportunities.
Non- discretionary will provide a client will all of the financial advice they need, but any final decision will remain in their hands.