Role of a Wealth Manager: Detailed Guide

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Key Takeaways: Wealth managers are high-level professionals who offer comprehensive personal financial services. They assist you by providing investment advice. They also conduct research on your behalf and allocate your assets based on your investment goals, horizons, and risk appetite. Wealth managers usually work with high and ultra-high net worth clients.

Introduction

As all the wealth in the world grows, so does the need for wealth management services. But what is wealth management in banking? Wealth management is a life-long advisory service offered to affluent clients to help build and execute a strategy for their financial management. When you opt to avail of wealth management services, you get access to customised solutions to make informed investment decisions based on your risk appetite, investment horizons, and investment goals. The role of a wealth manager is vital in the course of financial planning. Let us understand why a wealth manager is significant.

What Is Wealth Manager?

A wealth manager is a specialised financial advisor who offers wealth management services to high net-worth clients. Based on your investment needs and goals, a wealth manager offers you valuable advice and a range of additional services related to your financial life. Wealth managers may work individually, function as a small-scale business or even run large firms. You may receive your services from a single individual or multiple individuals belonging to a wealth management team.

What Does A Wealth Manager Do?

Now that we know what is wealth manager let us find out what they do. Being in the business of wealth management, wealth managers are high-level professionals and experts who offer comprehensive personal finance services. They procure data, evaluate information, make decisions, solve problems, establish interpersonal relationships, analyse data, identify goals, develop tailored strategies, and execute them.

No two wealth managers are the same, and naturally, the services offered by each are also different. In addition, most wealth managers possess a unique set of skills and offer customised services. Here are some of the services wealth managers commonly provide.

• Estate planning
• Accounting services
• Retirement planning
• Strategic tax planning
• Investment advisory services
• Banking services
• General long-term financial planning

Based on your exact needs, wealth managers can offer a personalised combination of the above-listed services.

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Wealth Managers and their Clientele

Wealth managers usually work with high to ultra-high net worth individuals. These are affluent clients with several assets and diverse investment needs. However, each wealth manager has their requirements for onboarding and accepting clients. These requirements could be a certain amount of investable assets or minimum account balances.

What Fees Do Wealth Managers Charge?

Similar to financial advisors, most wealth managers charge clients based on an annual payment model. Their fees may be a certain percentage of your AUM (Assets under Management). AUM is defined as the total market value of the investments a wealth manager invests on behalf of the client. Some managers may charge clients a fixed or hourly fee instead of an annual fee. Some may even work on a commission basis and earn through the investments that they sell, while others may levy a charge combining all the above.

As a client of a wealth manager, you must note that you are likely to pay for other expenses in addition to the basic, stipulated fees. These include the underlying costs associated with trading, fund management, and brokerage – in other words, the general fees all investors have to pay.

How to Choose a Wealth Manager?

Choosing a wealth manager is just like picking a financial advisor. To begin with, you may want to check the minimum balances or net worth that a wealth manager requires from a client to take on their services. You can also ask them about their existing client base to know what kind of people they have worked with.

Moreover, you must take into consideration if the wealth manager has the necessary advisory certifications and credentials. These will give you an insight into their experience and training in specific financial areas. It also helps to find an advisor who is more relevant to your financial purposes.

Another critical factor to consider is the fee charged by the wealth manager. The fee they charge depends on their experience. Choose a manager who offers an appropriate fee structure that works best for you and them.

Wealth Managers vs Financial Advisors

As stated above, wealth managers double as financial advisors in most regards, but there are some fundamental differences. Wealth managers differ from financial advisors, financial planners, financial consultants, and investment advisors due to the high level of services they offer. While financial advisors have specific focus areas and can help you with your specific investment needs, the significant difference lies in the degree of assistance you get from the wealth managers vs financial advisors. Wealth managers fundamentally offer holistic services that go beyond investment advisory services. They manage your money extensively.

The difference between a financial planner and wealth manager is that the former only helps clients with generic financial planning needs. Conversely, a wealth manager helps wealthy clients map out a comprehensive and long-term financial plan and assists them with other aspects of financial management, from estate planning to drawing out and executing wills and so on.

Investment advisors, as the words suggest, help clients make strategic investment decisions for their portfolios. However, wealth managers do this and more. They help clients select appropriate investments and sometimes invest on their behalf. Typically, wealth managers have some level of control over decision making while allocating assets, redeeming and reinvesting funds, and other aspects of building a corpus.

The Bottom Line

Now that you know what is wealth management in banking, you can decide whether you should consider availing the services of a wealth manager. Wealth management goes beyond financial advisory services and is a comprehensive approach. For high net-worth clients, choosing to work with a wealth manager instead of employing and coordinating with multiple financial parties is convenient and far less cumbersome. Before you hire one, make sure you discuss your short and long-term financial plans and check the track record of the wealth manager, the kind of clients serviced and their overall experience with managing a significant investment portfolio.

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*Disclaimer: This article is published purely from an information perspective and it should not be deduced that the offering is available from DBS Bank India Limited or in partnership with any of its channel partners.

The purpose of this blog is not to provide advice but to provide information. Sound professional advice should be taken before making any investment decisions. The bank will not be responsible for any tax loss/other loss suffered by a person acting on the above.