Wealth management#Private banking

Private wealth management is sought by high-net-worth investors. Generally, this includes advice on the use of various estate planning vehicles, business-succession or stock-option planning, and the occasional use of hedging derivatives for large blocks of stock.

File:Wealth Management Consultation.jpg

Traditionally, the wealthiest retail clients of investment firms demanded a greater level of service, product offering and sales personnel than that received by average clients. With an increase in the number of affluent investors in recent years,David Teather. [https://www.theguardian.com/business/2008/jun/25/richlists.globaleconomy Richlists]. The Guardian. 25 June 2008. there has been an increasing demand for sophisticated financial solutions and expertise throughout the world.

The CFA Institute curriculum on private-wealth management indicates that two primary factors distinguish the issues facing individual investors from those facing institutions:

1. Time horizons differ. Individuals face a finite life as compared to the theoretically/potentially infinite life of institutions. This fact requires strategies for transferring assets at the end of an individual's life. These transfers are subject to laws and regulations that vary by locality and therefore the strategies available to address this situation vary. This is commonly known as accumulation and decumulation.
2. Individuals are more likely to face a variety of taxes on investment returns that vary by locality. Portfolio investment techniques that provide individuals with after tax returns that meet their objectives must address such taxes.

The term "wealth management" occurs at least as early as 1933.{{cite book | last = Fowler | first = William Franklin | title = Fishermen and fish: A sequel to For America, an interpretation and plan | url = https://books.google.com/books?id=J5vXAAAAMAAJ | access-date = 2013-01-30 | year = 1933 | publisher = W.F. Fowler | location = Lynbrook, N.Y | page = 38 | quote = To the inefficiency of political control of government, which is the principal cause of unsound conditions, they would grant the additional authority and responsibility of wealth management. }} It came into more general use in the elite retail (or "Private Client") divisions of firms such as Goldman Sachs or Morgan Stanley (before the Dean Witter Reynolds merger of 1997), to distinguish those divisions' services from mass-market offerings, but has since spread throughout the financial-services industry. Family offices that had formerly served just one family opened their doors to other families, and the term Multi-family office was coined. Accounting firms and investment advisory boutiques created multi-family offices as well.

Certain larger firms (UBS, Morgan Stanley and Merrill Lynch) have "tiered" their platforms – with separate branch systems and advisor-training programs, distinguishing "Private Wealth Management" from "Wealth Management", with the latter term denoting the same type of services but with a lower degree of customization and delivered to mass affluent clients. At Morgan Stanley, the "Private Wealth Management" retail division focuses on serving clients with greater than $20 million in investment assets while "Global Wealth Management" focuses on accounts smaller than $10 million.

In the late 1980s, private banks and brokerage firms began to offer seminars and client events designed to showcase the expertise and capabilities of the sponsoring firm. Within a few years a new business model emerged – Family Office Exchange in 1990, the Institute for Private Investors in 1991, and CCC Alliance in 1995. These companies aimed to offer an online community as well as a network of peers for ultra high-net-worth individuals and their families. These entities have grown since the 1990s, with total IT spending (for example) by the global wealth management industry predicted to reach $35bn by 2016, including heavy investment in digital channels.[http://ovum.com/research/wealth-management-technology-spending-through-2016-business-function-segmentation/ Wealth Management Technology Spending Through 2016 (July 2012)]

Wealth management can be provided by large corporate entities, independent financial advisers or multi-licensed portfolio managers who design services to focus on high-net-worth clients. Large banks and large brokerage houses create segmentation marketing-strategies to sell both proprietary and non-proprietary products and services to investors designated as potential high-net-worth clients. Independent wealth-managers use their experience in estate planning, risk management, and their affiliations with tax and legal specialists, to manage the diverse holdings of high-net-worth clients. Banks and brokerage firms use advisory talent-pools to aggregate these same services.

The Great Recession of the late 2000s caused investors to address concerns within their portfolios.

Yeh, C: "Investors Challenge Market 'Truths'", CFA Institute Private Wealth Management, August 2009.

For this reason wealth managers have been advised that clients have a greater need to understand, access, and communicate with advisers about their situation.

Costa, L: "Questions Replace Investment 'Truths': A Comment", CFA Institute Private Wealth Management, May 2009. Quote:"This state of affairs poses a dilemma for wealth managers, who, for a generation, have adhered to the core principles of asset allocation and earned their keep by preaching the mantras of 'buy and hold', 'invest for the long term', and when things get tough, 'stay the course'."

{{anchor|Financial life management}}

As awareness of wealth management has become more common, some companies have shifted towards a model which asks clients about life goals,{{cite web |title=How can "goals-based" wealth management prepare me for different life stages? - Worth |url=https://www.worth.com/how-can-goals-based-wealth-management-prepare-me-for-different-life-stages/ |website=Worth}} working environments, and spending patterns as a way to increase communication. The industry-recognized wealth management was more than an investment advisory discipline.Welch, Scott, "Perspectives on Serving the Ultra-High-Net Space An Interview with Jean L.P. Brunel and Charlotte Beyer" IMCA Wealth Management Monitor, Jan/Feb 2016

In 2015, United Capital rebranded their wealth management services using the term "financial life management", which, according to the company, was intended to more clearly define the difference between wealth management companies and more affordable brokerage firms.{{cite web| url=http://www.thinkadvisor.com/2015/03/25/united-capitals-duran-wealth-management-is-dead-lo|author = Gil Weinreich| title= United Capital's Duran: Wealth management is dead. Long live life management!|date = March 25, 2015|work=ThinkAdvisor|publisher= ALM| access-date= September 17, 2015}} The same year Merrill Lynch began a program, Merrill Lynch Clear, which asks investors to describe life goals, and includes an educational program for clients' children.{{cite news| url=https://www.nytimes.com/2015/03/21/your-money/financial-advisers-seek-to-inject-a-more-human-element.html|last= Sullivan|first=Paul| title= Financial advisers seek to inject a more human element|date = March 20, 2015|work= The New York Times| access-date= September 17, 2015}} For clients looking to leverage their wealth for the sake of achieving philanthropical and charitable goals, social finance investments may be included.{{cite web |title=Wealth Management: The rise of social impact investing |date=11 January 2022 |url=https://ukfinancialservicesinsights.deloitte.com/post/102hg2x/wealth-management-the-rise-of-social-impact-investing |publisher=Deloitte |access-date=15 March 2023}}

According to Euromoney's annual Private banking and wealth management ranking 2013, which consider (amongst other factors) assets under management, net income and net new assets, global private banking assets under management grew just 10.8%YoY (compared with 16.7% ten years ago).[http://www.euromoney.com/Article/3151553/Euromoney-publishes-10th-annual-Global-Private-Banking-SurveyUBS-returns-to-the-top.html Annual private banking industry assets under management]

The largest private banks and wealth managers in the world as of 2018 are as follows:{{cite web | title=Euromoney publishes 10th annual Global Private Banking Survey – UBS returns to the top | website=Euromoney | date=6 February 2013 | url=https://www.euromoney.com/article/b12kjwrh63789s/euromoney-publishes-10th-annual-global-private-banking-survey-ubs-returns-to-the-top | access-date=10 January 2025}}

• Multi-family office
• Private banking
• Robo-advisor

{{Reflist}}

• Spear's Wealth Management Survey, {{cite web |title=Spear's Magazine |url=https://www.spearswms.com/ |website=Spear's Magazine}}
• {{cite book|last1=Harrington|first1=Brooke|title=Capital Without Borders: Wealth Managers and the One Percent|date=2016|publisher=Harvard University Press|location=Cambridge, Massachusetts|isbn=9780674743809|oclc=944339474}}
• {{Cite book|title=The Purposeful Wealth Advisor : How to Build a Rewarding Career While Helping Clients Achieve Their Dreams|last=Sharma|first=Raj|last2=jSieg|first2=Andy|publisher=Amplify Publishing|year=2022|location=Herndon, VA|isbn=9781637555484|oclc=1370903083}}

• [http://www.occ.gov/publications/publications-by-type/comptrollers-handbook/invmgt.pdf Investment Management U.S. Treasury Handbook]

{{wikidata-inline}}

{{Wealth}}

{{DEFAULTSORT:Wealth Management}}

Category:Stock market

Category:Investment management

Category:Financial services occupations

Category:Financial management