Wealth management is a financial service that provides expert advisory solutions and guidance on all aspects of money management to its clients. Effective wealth management helps you become financially secure, maximise your finances, plan for your retirement, and make and track investments so that you can realise your financial goals quickly.
Wealth management is essential, as it enables you to improve your net worth and get better returns on your investments. A wealth manager is your point of contact and provides support to achieve your personal and financial goals through detailed goal-oriented planning.
Key wealth management objectives
Some wealth management objectives include:
- Setting goal-oriented wealth management plans
- Managing and proposing investment options
- Tax-saving strategies
- Maximising wealth and reducing spending
- Estate and retirement planning
These are some of the basic services a wealth management firm provides. As a client, depending on your focus areas and requirements, you can discuss more services and objectives with the wealth manager.
What is wealth management?
Wealth management is a financial advisory service that assists in making informed decisions about managing finances and setting long-term goals.
Below are some of the services that come under wealth management:
- Estate planning
- Investments
- Retirement planning
- Tax optimisation
- Debt management
- Insurance and other schemes
- Charity and donation assistance
- Personal advising
- Asset management
You or your business can receive assistance from a wealth management team to build, preserve, and manage your estate, investments, and finances. They also safeguard you from potential liabilities. It is a misconception that only big businesses and wealthy clients require this service. No matter your budget or estate, striving for financial literacy is essential.
How much money is required for wealth management?
There is no minimum or maximum amount of wealth required for acquiring wealth management services. Everyone should be able to manage and grow their finances.
If some firms have a minimum net worth or investable asset requirement, then consider going for an independent wealth manager.
Wealth management strategies
Here are some strategies for effective wealth management:
- Asset allocation: The optimisation and distribution of investments among different assets in your portfolio based on your risk tolerance is called asset allocation.
- Risk evaluation: Basis your financial goals and investments, a complete risk evaluation is done by the wealth manager to avoid any losses or setbacks.
- Tax-loss harvesting: An investment strategy that can help offset taxes owed on capital gains is tax-loss harvesting. This technique involves using the capital losses from one investment to balance out the taxes owed on the profits gained from another investment.
- Diversification: Creating a mix of different investments within a portfolio is diversification. This strategy helps you limit exposure to just one investment, avoiding risks and ensuring a good combination of assets in the portfolio.
Most often, these are the strategies that are employed. However, a wealth management firm carefully analyses your individual portfolio to determine the best-suited strategies for managing your wealth.
Also read: Quick asset
Alternatives to wealth management
You can opt for alternative investments instead of hiring a wealth manager. Here are some of the alternatives popular among investors in India:
- Hedge funds
- Managed futures
- Derivatives
- Private equities
- Private credits
- Infrastructure and real estate investments
- Investments in natural resources
It is important to note that investing in these alternative options requires intensive research or consultation with an expert to avoid any major risks to the investor.
How to find a wealth manager?
Hiring a wealth manager or a firm is a prudent decision to keep your finances on track and set goals for your future. It does not matter how wealthy you are or what your budget is. There is an option for everyone who wishes to achieve financial independence.
You can either book a consultation to get started or go for yearly plans for holistic, long-term planning. Multiple firms in India provide the service as per your goals, budget, and the type of financial planning you need.
Here are five factors to consider when finalising a suitable wealth management firm or manager:
- Experience: Ensure your manager is well-qualified. Professional background and experience are necessary if they are about to take charge of your financial planning.
- References: Check past clients and references provided by the firm or the manager to verify their credibility.
- Fee or budget: It is natural if you don’t want to hire an expensive wealth management firm. You can always pick a budget-friendly option that helps you feel secure and achieve your financial goals.
- Licences: Depending on the services provided under wealth management, ensure the firm’s licences are in place and all their documents are up to date.
- Open communication: Being completely transparent with your wealth manager is important. Keep an open line of communication and pick one who encourages you to do the same. You should feel free to communicate even a bad financial decision so you can course-correct.
Depending on your preferences, there can be more personalised factors to consider. It is advised you take your time, book multiple consultations to find the right fit, and stick to the same wealth manager or firm once you are set.
Conclusion
Wealth management is not just a service that helps you through financial crises or wealth distribution issues. It covers every aspect of your financial life, enabling you to make smart decisions about how to use your wealth to generate more money and comply with tax laws. It is crucial to understand the importance of wealth management for your day-to-day life decisions and prepare for your future.
