Wealth management is a process where an affluent individual can create better alpha on their
existing portfolio. Wealth management is generally done for those individuals who have an existing
investment portfolio and they are seeking better returns over their portfolio by way of asset
diversification and better allocation.
Wealth management varies with respect to the individual’s perspective. For affluent individual wealth
management can be considered as a well studied strategic process that is used to solve and increase
his or her financial position. Concerned individual trusts a financial adviser to have an insight of their
financial position and come up with a plan to manage it that will ultimately result in a better
outcome/situation, than the one that they started with. From an Advisor’s perspective, wealth
management looks different. It’s the ability to look at and understand a client’s financial position.
After thorough understanding and analysis, advisor attempts at utilizing a full range of financial
services and products to put together a plan that works to improve the finances of the affluent
individual.
A financial plan helps define unique goals and objectives and helps create a strategy on how to
accomplish those goals. With a comprehensive evaluation of an individual’s financial goals and
financial state, and by using currently known variables, projections (generated by a financial plan) an
advisor can illustrate the future financial state. These variables can include cash flow, income versus
expenses, asset values, withdrawal needs, net worth, tax liabilities, asset allocation, retirement plans,
estate plans, etc. While determining the current and future state of a person’s financial position, the
plan also addresses steps that can be taken to change and increase the probability of success in future.
Wealth management can be considered as the outcome of a well-executed financial plan. In a
simplistic definition, it is the management of wealth, which means a person needs wealth in order to
need wealth management services. Wealth management is the consultative process of using
investment strategies to help meet the needs and wants of clients by providing the appropriate
financial tools and services. Wealth Management helps in increasing better return on pre-existing
portfolio by using different investment strategies and tools.
Financial planning usually means creating a strategy for accumulating wealth for retirement or
specific personal goals. Wealth management focuses on managing financial assets with a
performance level in mind. Wealth Management, in Comparison, considers the total net worth of a
family, a couple or an individual. It weighs financial decisions in light of an investment portfolio and
additional components of the financial picture at large.
Wealth Management is an important tool & service for affluent individuals. Wealth management services not only help in increasing returns but also help in reducing risk. It helps in foreseeing the future and hence adapt current steps accordingly. It’s a professionally managed service that leads to better management of money and money matters. Every service has its own advantages and limitations but if used effectively than it can create miracles.