Wealth management, consulting services, advisory services, and portfolio management are sometimes, wrongly, thought to be different words for the same thing. However, these are considerably different once you get to know them.
If you want to get such a service, it is important to know about all of these so you don’t end up getting the wrong service! For instance, a wealth management service won’t help you in managing your financial portfolio.
So, let us now look at these three separately.
You many have heard that 50-60% of the world’s wealth is held by the top 1-5%. That’s very true. The problem is that even the rich cannot handle all their wealth by themselves. There is just so much to handle! Thus, they need the help of a wealth manager.
Wealth manager caters to all your financial requirements. These services are typically taken by high net-worth people, small businesses, and family businesses. Wealth managers therefore determine your financial needs, your risk appetite, and then develop a suitable plan. The focus is to maximize your current wealth.
Wealth managers work with bankers, lawyers and attorneys to fulfil those tasks given by their clients. They study various financial products, pick the best and allocate their client’s wealth accordingly.
Buy, keep and sell off investments depending on market performance and activities
Undertake fund hedging activities
Focus on real estate related activities and new investment ventures
Handle client’s international assets
Address long and short term requirements of the client
Planning the client’s will
Planning philanthropic and retirement planning for client
Manage client’s taxes
Portfolio management has a much narrower scope than wealth management. It is concerned with helping you pick the best financial product and creating a strong portfolio. In short, it caters to caring for your investments and protecting them. Factors that are important in portfolio management are your objectives, your age, your risk appetite, and other factors. Your designated funds are allocated over various investment avenues. Portfolio management services aid in diversifying and rebalancing your investments when you so need.
These are specialist services. When you have problems with business such as those involving expansion, mergers and acquisitions, you need this type of service.
There is risk in all of these services. Some less than in others, but there is always a risk. But now, you do know which service to go for when the appropriate problem arises.