Why are people hiring more and more wealth managers these days?

Wealth acquired by a person or a group of people can be more than just currency. If well managed, it can be an economic enabler too. Enter wealth management. According to Forbes, wealth management is an advisor or advisory team's ability to deliver a full range of financial services and products to an affluent client in a consultative way. In other words, it simply refers to money management, but in all its aspects. Today, there are a number of wealth management firms that offer investment management, comprehensive financial advice, tax guidance, estate planning and even legal assistance. Generally, these kinds of services are best suited to affluent clients. Although this service is available for anyone who has signed an agreement with a firm to have their money or investments managed.

The wealth managers have expertise in the types of financial questions that affect the ultrawealthy, such as how to avoid the estate tax. They often coordinate services among different experts, such as working with a lawyer or an accountant on your behalf. Also, it is their job to manage the tax ramifications of business income and set up a donor-advised fund for their employer's charitable contributions. These managers are paid through a percentage of assets under management, though some are paid a flat or hourly fee. At a large firm, wealth managers may even receive a salary and possible bonuses. Today, there are several banks that have specialized sales and service teams to specifically cater to wealth management clients.

Why wealth management?

It also encompasses financial planning and investment portfolio management. Wealth managers can analyze the overall financial situation and suggest or take steps to maximize the wealth (taking into account the client's aversion to, or comfort with, risks) via holistic strategies and protect it down the line. This is what makes wealth management different from asset management, which primarily involves managing investments like stocks, bonds, mutual funds, ETFs (exchange-traded funds). In addition to investment services, wealth management clients are provided with tax planning, estate planning, legacy planning, charitable giving, retirement planning and more.

Also, unlike private banking, wealth management can be practiced on a portfolio of any size. Further, wealth managers provide their clients, access to a wider range of investments than regular financial advisors, such as hedge funds and private equity offerings.

Future scope

KPMG states that the wealth management industry will continue playing an integral role in helping individuals meet their financial objectives. However, it also needs to continue innovating to respond to new challenges and opportunities. These can be either volatile market conditions, changing client expectations, the blurring of traditional industry boundaries, the onset of the digital age, or the sustained regulatory scrutiny. Currently, wealth management firms are leveraging technology to deliver an increased understanding of client behavior, assessing net wealth across banking, investments, debts, pensions and much more.