What Is Wealth Management? Wealth management is long-term investment advice and asset management for very wealthy private individuals. Here, the investor is offered individually tailored financial services over various life cycles.
In the context of private investors, the term asset management means that there is more than just investment advice. Instead, a wealth manager (agreed with the client) takes full control of the amount invested. In general, the term asset management also describes a business with institutional investors such as foundations and insurance companies, i.e. an area that is not covered by private banking.
Who is wealth management for?
The clients who make use of wealth management are mostly wealth millionaires. The term High Net Worth Individuals (HNWI) has become common in this area. In the World Wealth Report of the investment bank Merill Lynch and the management consultant Capgemini, US dollar millionaires are named as HNWI. The super-rich and ultra-high-net-worth individuals (UHNWI) are incredibly popular with banks; according to the World Wealth Report, these include wealthy people over $ 30 million.
What qualifications do wealth managers have?
In line with the complex asset structure of HNWI, wealth managers must have broad financial knowledge: They develop investment strategies, provide tax and legal advice and support clients in inheritance disputes as well as in foundation and insurance issues.
Wealth managers, therefore, mostly have commercial training or a degree in economics. Often they also have an additional professional qualification as a Certified Financial Planner (CFP) or Chartered Financial Analyst (CFA). Wealth managers are at least equally characterized by their good manners and not least their ability to maintain absolute discretion.
Digitization of wealth management
Private banks are coming under increasing pressure not only from family offices but also from digitalization. So-called robot advisors, in particular, compete with wealth managers. These robots advisors use algorithms to calculate an investment strategy that is personally tailored to the investor. Robo-advisors are popular with wealthy investors primarily because of their transparency, as costs and the current performance of the investments can be tracked in real-time.
Classic wealth managers at a private bank, on the other hand, can score points with their close and comprehensive personal advice. However, you can no longer rely solely on your superior investment strategies and an international team of experts. Up-to-date wealth management must, therefore react to digitization in terms of customer communication and investment planning.
What Is Wealth Management?