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Wealth Management

It’s nothing new. Wealth management and the legions of people and services to help other people manage their wealth have grown in line with overall (and phenomenal) wealth creation over the last 150 years or so. 

Common terminology associated with the high end wealth management helpers includes: private wealth management, private banking, fiduciary agents, tax advisors, succession planning, ultra net worth individuals, high net worth individuals, bulge bracket, family offices etc. 

Wealth Management – Who’s who?

At one end of the wealth management hierarchy we have the ‘big boys’ in the wealth landscape. Think Union Bank of Switzerland (UBS), Goldman Sachs, CITI, Merrill Lynch, Morgan Stanley, BNP Paribas, JP Morgan.

These firms have grown in line with overall wealth creation over the last century. They offer advisory and investment services which cater for clients that include financial institutions, charities, pension plans, insurance companies and Ultra High Net Worth Individuals (UHNWI). 

If you’re wondering what an UHNWI looks like – They’re generally individuals with £10 – 20 million of liquid (investable) assets. 

In China there are predicted to be almost 40,000 UHNWIs by 2026!

Further down the pecking order we have high net worth individuals (HNWIs) and these form the bulk of where the resources of the wealth management industry’s products and services focus. Generally, these are individuals with 1 million plus but many wealth management firms are not too choosey, with some accepting a mere 500,000 as proof of HNWI status. 

And towards the bottom of the wealth management hierarchy are the ‘masses’. If you only have 500k or less, then you will fall into this group. But a very important group when you consider the aggregate wealth of lots of individuals (or pots of wealth!) within this group.

Peculiarly, even though this group is significantly less wealthy than both UHNWI and HNW individuals, the term ‘wealth’ is associated much more with this group. This may be due to the aspirations to become wealthier and/or the limited knowledge and expertise regarding financial planning and wealth management. In turn, their need for wealth management advice is more necessary. 

The overall objectives and needs of each individual are as different and unique as each of us are, but with the right kind of wealth helpers we can live a good life and leave those we care about with a lasting legacy that makes a difference. 

Wealth Management – Products and Services

Leaving aside the UHNWI and HNW individuals the bulk of the effort from the wealth management industry is for individuals to ‘potentially grow’ their wealth by using products such as investment trusts, Unit Trusts, Exchange Traded Funds (ETFs) and various other forms of investment to build capital and grow capital. Using discretionary fund managers is a growth area for those without the time or inclination to manage their investments themselves. 

Tax shelters such as ISAs, LISAs, EIS’S and SIPPs, as well as making the most of all tax allowances and exemptions, help towards making the most of what you have.

Estate/Succession planning, by effectively using trust arrangements, means that wealth can be passed along.

In day to day life many of us choose to take the route of trusting a financial advisor who will then park our funds with a ‘fund manager’ that will charge a percentage to invest our money and make us a return. That’s the theory anyway!

Wealth Advising

Because of the vast range of products and services, legal and financial jargon, lack of financial education and excess money around; wealth advising is big business. The higher up the wealth scale you are, the more you can utilise the very best services available – usually lawyers, tax advisors and trust experts.

For the rest?

Wealth advisors/financial planners  can help with:

  • Finding suitable products by providing suitable advice.

  • Building capital

  • Growing capital

  • Taking income in an efficient way

  • Monitoring investments and returns

  • Keeping you up to date with tax and legislation changes

  • Succession planning

  • Taking care of the administrative matters such as wills and powers of attorney as well as making use of effective trust strategies

Wealth Management – Pensions

There has been huge growth for the wealth industry following the changes to UK pension’s legislation in 2015. There are now more people than ever in need of advice and requiring investments that will boost their retirement savings.

This is like a ripe peach for financial advisors who can now seek out opportunities of languishing DB pensions that can be transferred and invested into funds.

Wealth Management and Regulation

Broadly (in the UK anyway) investors are separated into ‘retail clients’ who benefit from the most protection and professional clients who benefit from less protection. Logically, the wealthier you are the more you can have professional legal and financial advisors around you. And if there is a  dispute, this will end up in a commercial court.

 

In contrast, retail clients need more protection because their knowledge and experience is usually much more limited. It’s debatable how effective financial services regulation is and there are as many examples of regulatory successes as there are failures, it’s just the regulatory failures that hit the headlines.

In conclusion, no matter where you are in the wealth hierarchy you may need some advice. How you source this advice (and pay for it) is at your discretion. The only true gauge of how useful a wealth helper has been is by evaluating how much they have helped you to increase your wealth.

 

This is easier said than done!

Wealth Management FAQ’s

Do I need a Wealth Advisor?

It depends. If you have knowledge and experience of investment products, then your requirements for guidance and advice may be less than somebody else who has no prior knowledge or experience. However, it’s a regulatory requirement to take financial advice for any DB pension valued at £30.000 or more.

How do I find a wealth advisor?

The easy way is to enter your details below.

How much does financial advice cost?

It depends. Whether we call it charges or fees, initial fee or ongoing fee, expect to pay at least 1% of an investable amount but anywhere up to 5% can be charged.

Some advisors might charge you a fixed fee.

Can I trust a financial advisor?

This is a personal thing. If an advisor comes recommended from somebody you trust, then this goes a long way. If this is not the case, there are a number of tests you can perform to evaluate whether or not our potential advisor is trustworthy or not.

Who regulates wealth advisors?

In the UK the Financial Conduct Authority is responsible for the regulation of financial advisors.

Am I wealthy?

We’re all wealthy compared to our distant ancestors. If you have excess liquid funds available (besides your main residence and a certain level of savings) you are classified as wealthy.

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