If you want to grow your wealth, minimize financial risks, and protect your assets, enlisting the financial services of wealth management firms and wealth managers can be incredibly helpful. These professionals can help you put together a plan that will allow you to achieve your financial goals. Wealth management firms offer various financial services that cater to the investment demands of wealthy clients. While some of these services can be comprehensive, others are as simple as assisting you in investing some of your money. 

Here is a closer look at the concept of wealth management, including its types, strategies and other vital points that you should be familiar with before taking any major steps.

What is wealth management?

Wealth management is the most advanced type of financial advisory service. It is considered a comprehensive service that takes a holistic approach and includes investment management, tax guidance, financial advice, retirement, accounting, estate planning, legal assistance and other financial matters. 

Wealth management is a high-end service that is generally directed toward affluent clients and those with a high net worth. Therefore, some wealth management firms may demand a particular level of assets or a minimum net worth before working with someone. This level of service can be helpful for clients as they can receive all types of financial advice in one place.

Key objectives of wealth management

Each investor has unique needs, requirements and situations, so the objectives of wealth management may vary from one client to another. Some of the major goals of wealth management include:

• Setting up plans for passing a client’s wealth to their heirs
• Assisting clients in maximizing their wealth and assets
• Designing customized strategies to help clients achieve their goals
• Using a variety of investment and financial services to address the diverse needs of clients
• Managing affluent clients’ investments and finances

What is a wealth manager?

A wealth manager or advisor is a certified professional who provides financial advice and an extensive range of services to clients who require assistance with wealth management. Many private wealth managers collaborate with other financial experts, such as estate planning specialists or accountants, on behalf of their clients to present them with comprehensive financial advice.

A wealth manager reviews and gathers information regarding a client’s needs and financial situation through a consultative process. Using this information, they tailor a personalized investment strategy to help their clients manage their assets, grow their wealth and achieve financial security.

A professional wealth manager is required to learn and understand investment strategies and financial markets, all of which require years of education and experience. To start off your journey to becoming a wealth manager, you will need to acquire a Master’s in Business Analytics. This can be achieved easily through online courses such as Aston University’s online MSc Business Analytics course. Courses like these will enable you to develop the knowledge and technological skills that are in high demand by organizations around the world.

Wealth management strategies

Wealth managers use a range of strategies to help their clients boost their wealth and reach their financial investment goals and ambitions. The strategies employed by different wealth managers often depend on a client’s unique needs and financial situation. Here is a look at a few of the most common strategies incorporated by wealth managers.

Rebalancing

Rebalancing is a strategy that involves realigning a client’s assets to uphold the original risk/reward ratio as situations shift.

Asset allocation 

Asset allocation is a process that divides an investment portfolio into different asset categories, such as bonds and stocks.

Tax-loss harvesting

Tax-loss harvesting is used to reduce and limit capital taxes by selling assets that have experienced losses and substituting them with similar investments.

Diversification

This is a risk management approach that involves investing funds in a range of assets to reduce and minimize the impact of losses on any particular investment.

Types of wealth management

Outlined below is a closer look at the types of wealth management offered by wealth management firms.

Estate planning

Estate planning is a type of wealth management that focuses on setting up and arranging a plan for the management, disposal and distribution of an individual’s estate and wealth. These plans are set up during a client’s lifetime to determine what will happen to their assets upon their death or if they become incapacitated. This planning also includes the passing of the estate to heirs and the settlement of estate taxes.

Investment management

As the name suggests, investment management is about the professional asset management of a variety of securities, such as bonds, shareholdings, real estate, and other assets. In this type of wealth management, a wealth manager’s role is to aid their clients in meeting specified financial goals by helping them invest in funds, bonds and stocks and monitoring these investments for them. 

Financial planning

Financial planning is a subset of wealth management that focuses on the comprehensive evaluation of a client’s finances using known variables and advising them on financial decisions so they can achieve their long-term and short-term financial goals. Financial advisors are their main point of contact and help them invest, file taxes, negotiate financial settlements, budget, save for retirement and much more.

Tax accounting

Tax accounting is a branch of wealth management that focuses on tax payments and returns. With the help of tax accountants, clients can determine which deductions they can make to minimize their financial liability when tax season rolls around. It can also aid them with tax matters that are complicated due to the funding or investments they have made.

Asset allocation

Asset allocation involves the creation and implementation of an investment strategy based on a client’s goals, investment time frame and willingness to take risks. The goal is to attempt to balance risks and rewards by adjusting the percentage of each asset in an investment portfolio.