What is Wealth Management?

Wealth provides you with money that can be used to realize your financial and
personal goals. It aids you to sustain life and remain in good stead even when you
are no longer employed. Wealth can get eroded, i.e., reduce in value, over time, if
parked on the wrong avenues. Proper wealth management can help plan your
money better so that it continues to grow.

Wealth Management – Definition

Wealth management is a part of financial services that assists you in managing
your money and provides you with advisory services.
Wealth management includes comprehensive guidance on finance, taxation, estate
and legal. Your wealth manager can be your single point of contact who will
collaborate with accountants, estate managers, and tax experts to design a holistic
wealth plan.

The Structure of Wealth Management

In wealth management, a single designated wealth manager provides the customer with the necessary
services. Depending on the firm, the wealth manager may perform their duties as a financial consultant or
financial counselor. The advice employs a Flexible Investment Approach with a Risk Management policy
while offering wealth management services.
The goal of the wealth management advisory is to assist their customer in fully understanding what is
happening in their account and the reasons behind it.

How does Wealth Management deal with different areas of

management?

Wealth management offers responsive, direct customer service. Asset allocation management, tactical
management, and diversified management are all topics covered under wealth management.

Asset Allocation Management - Investment advice called Asset Allocation Management is entirely
committed to managing investment portfolios with the sole goal of generating income. By switching
between investment categories, it seeks to balance the risk.

Tactical Management - By deciding on the finest choices and tactics, tactical management aids in
identifying the suitable means to implement financial strategies.

Diversified Management - The management team at Diversified Management assists its clients by
offering a customizable model that meets their needs.

Why is wealth management so crucial?

In managing financial matters, wealth management is important. Most often, people invest a sizable sum of
money in their savings to build up capital with the hope of providing their loved ones with financial
security. The goal will not be served by putting aside the savings. Making the appropriate plans to
determine how one might use their savings is equally important.

A person can receive a plan for how to invest their money from wealth management services. Wealth
management advice aids the individual in developing a financial strategy to use their assets in a way that
practically all of their financial goals are achieved. Through effective investment strategies or efficient tax
preparation, the guidance ensures that the money invested keeps compounding.

Goals are incredibly easy to achieve with sound money management and financial planning. Before
developing financial strategies, it's critical to recognize and comprehend your financial advantages and
disadvantages. The development of strengths and the recognition of difficulties are both aided by sound
financial tactics. The wealth management specialist aids in putting the plan into effect and also frequently
assesses its progress. Making plans to guarantee the loved one's financial security is assisted by wealth
management advisors.

Process of wealth management

The following steps are included in the wealth management process.-

 Evaluating the client's existing financial status

 Identifying financial objectives.
 Creating a customized solution to meet the objectives.
 Incorporating the financial strategies into the plan.
 Reviewing plans and keeping an eye on the results.

Benefits of wealth management

Some of the benefits of wealth management services are discussed below:

 Helps in providing an organized financial plan

Financial planning is assisted by the wealth advisor through wealth management services. By offering
appropriate advisory, it aids the customer in methodically raising funds. Knowledgeable wealth managers
assist their clients in comprehending the needs and objectives to be met. Financial strategies are established
with the aid of wealth management. The wealth advisory invests a lot of time and energy in understanding
the client's requirements and aids in achieving the requested financial goals.

 It helps in reducing your financial Stress

Wealth advisers assist their clients in recognizing financial uncertainty through their knowledge and skills.
When necessary, wealth experts aid in making important financial decisions. Wealth advisors assist their
clients in budgeting during uneven market conditions that can frequently cause Stress. Financial Stress is
lessened, and financial decisions are prioritized through wealth management. When setting goals, the
wealth management advisor considers all financial factors, which helps in organizing the finances from
time to time.

 Provides customized services

Depending on a person's finances, wealth managers offer them tailored services. To put it another way,
there is no one-size-fits-all strategy for asset management. The devoted wealth management advisory
offers each client personalized services. The client's individual needs are taken into consideration when the
wealth manager develops financial solutions. The wealth manager serves as both a financial advisor and
counselor. The client can speak with their wealth manager at any time about any issue about their financial
affairs, and the wealth management advisory supports its client by developing numerous solutions to meet
all of their demands.

 Provides a flexible Investment approach

The wealth manager always considers the client's improvement and financial well-being, which is why
they offer a flexible investing method as needed. Both market categories and market conditions are taken
into account by wealth management advisory. By using wealth management, advisors commit their time to
helping clients navigate difficult financial ups and downs, which enables them to make wiser investment
decisions. Wealth managers employ this adaptable investing strategy, which allows the advisor to alter the
financial plans in light of fresh concepts, perspectives, and market circumstances.

What are wealth management services?

By offering comprehensive research-based advice services as well as adequate and personalized

investment execution, wealth management offers all-inclusive services. A wide range of services from
Wealth Management are incomparable and include debt, equity, mutual funds, insurance, derivatives,
commodities, and funds. The goal of wealth management services is to make clients' dreams into reality.

Before presenting wealth management services, the wealth advisor considers the type of financial planning
and management that the customer needs. Planning and protecting your finances, creating a business plan,
and taking care of your retirement needs are all part of the wealth management services that will help you
improve your current and future financial situation and way of life. In wealth management, a persistent
business strategy is combined with a clear indicator of individualized care and committed client service.

Role of a wealth manager in wealth management?

The development of strong connections with customers and assisting them in making wiser decisions are
key functions of a wealth manager. A wealth manager is a specialist who provides integrated services such
as real estate planning, tax planning, financial planning, and investment advising.
When buying and selling equities on behalf of clients, the wealth manager functions as a broker. The
wealth manager's comprehensive understanding of the investing industry and money management aids
them in efficiently managing the customers' financial affairs.Before providing services to clients, the
wealth manager must also meet several requirements.

Level of qualification - Each organization has a different set of requirements for a wealth manager's level
of training. It is required for wealth managers to complete employer-based training before joining the job.
A degree and knowledge in a variety of subjects, such as finance, economics, management, or a math-
based subject, are required.

With sufficient financial services experience, this is a good path to wealth management. An approved
qualification from the Financial Conduct Authority's (FCA) list of Appropriate Qualifications must be
completed before a wealth manager can start practice.

Once qualified, it is necessary to maintain your training, stay current on any changes to legislation or
procedures, and enroll in other courses to broaden your knowledge.

Required Skills

The skills required to be a wealth manager include

1. Good organizational skills

2. Competent in managing complicated situations
3. Strong interaction skills
4. Knowledge and experience in various subjects.
5. IT capabilities
6. A capable administrator
7. Judging skills
8. Examine the risks associated with particular investments.
9. Improved interpersonal skills and trustworthiness.

Wealth Management Techniques

Industry-wide, wealth managers employ a variety of strategies. Some of the most popular investment
methods include
Asset management - The practice of distributing a portfolio of investments among several asset classes,
such as stocks and bonds.

Diversification - A risk management strategy that involves buying a variety of assets to spread risk and
reduce the impact of losing any one item.

Rebalancing - The process of realigning the assets in a portfolio when circumstances change to keep the
reward ratio.

Harvesting tax losses - A method of reducing capital gains taxes by disposing of securities that have lost
value and replacing them with equivalent investments.

These are just a handful of the methods wealth managers might employ to assist you in achieving your
investing objectives. Your unique situation will determine the exact tactics.

Common Services Available in Wealth Management

Investment Management - A wealth manager will work with you to develop an investment strategy that
is specific to your goals and risk tolerance. If the manager is a licensed investment advisor, they will also
select and manage investments on your behalf, frequently in exchange for an annual fee.

Financial Planning - A wealth manager enables you to develop a financial strategy that includes your
spending, investing, and saving goals. The supervisor can also help you propose saving for retirement,
college, and other important life events. As your circumstances change, you may occasionally review these
strategies.

Tax Guidance - A wealth manager might make suggestions about how to structure your budget to reduce
your tax liability. If you personalize your business or have many revenue streams, this is essential.

Estate Planning - You can increase your plan for what will happen to your belongings after your death
with the help of a wealth manager. This could also entail making a will or selecting certain beneficiaries.
However, wealth managers offer comparable services to high-net-worth individuals (HNWIs) or
authorized traders with assets in the millions.

How Enterslice helps its client by providing wealth

management services?
Our clients may acquire the information they need regarding changes and developments in the financial
sectors with the expertise of our team of professionals in law, finance, fintech, and revenue management at
Enterslice. It aids in portfolio management and regular portfolio updates. Additionally, Enterslice offers
value-added advice and services about portfolio management, sector switching, etc. We also offer
investment advice that has been given by our research team after careful examination of the financial
markets and market data.

Wealth management is a lengthy process that needs careful preparation, thorough research, and the
appropriate selection of wealth products. Enterslice combines all three through our professional wealth
management service to assist clients in achieving their short- and long-term financial goals. Other wealth
management-related services offered by Enterslice are:

 Extreme wealth brings with it extreme complexity. To assist individuals and families in managing
the many facets and legacy of their money, Enterslice offers end-to-end wealth management
solutions.
 Our expertise approach to investing offers your portfolio the best risk-adjusted return.
 Regular portfolio reviews by a specialized analysis team and our core research and fund
management teams provide additional support.
 Access to our top products in all categories, including venture and private equity funds, structured
instruments, equity, debt, and real estate.

Common Challenges Affecting Wealth Management

The ultimate purpose of wealth management is to provide security and peace of mind so that you
may enjoy the present moment to the fullest.

However, some factors tend to disrupt wealth management and we discuss them below.

1. Science Vs Human

According to a MagnifyMoney poll, 63% of Americans are receptive to adopting robots as

financial counselors.

But keep in mind that this does not imply that robots will replace people as advisers; rather, it
highlights the fact that many businesses have adopted the strategy of deploying robots as
advisers.

Robot advisers have become more commonplace over the last few years. Some businesses
employ sophisticated algorithms to generate individualized financial plans and asset allocations
as well as to direct investors to pertinent studies.

Some companies have also developed tools and algorithms that produce real-time data
analysis and suggestions for individual clients’ investments.
2. Newer Asset Class

With the gradual dominance of assets like cryptocurrency, Sustainable and responsible investing
and ESG funds in the financial sector, investors seek newer avenues to keep up with these
trends.

The wealth management industry needs to adapt to this ever-changing demand, considering
these newer asset classes are getting acceptance all over the world.

3. The Re-wired Investor

Younger investors’ decisions to buy and use wealth management services are influenced by the
changing attitudes and expectations that this generation of investors brings to the Wealth
management business.

The Re-wired Investor views advice differently than prior generations and anticipates engaging
with advisers in a new manner. Investors, for example, no longer wish to be addressed as a
segment but as distinct people with distinct interests and preferences.

Instead, they expect to receive advice tailored to their unique circumstances.

They also want to maintain control over their financial life, grasp the information they are given,
and make critical decisions for themselves.

4. Aging Advisors

Two significant phenomena that will have an influence on the wealth management sector in the
coming years are the wealth transfer from baby boomers to their children and many advisors
reaching their retirement age.

There are further difficulties brought on by the aging of the advisor population. First, the
deteriorating client-advisor relationships are a result of the widening age gap between advisors
and the Re-wired Investor, which makes it difficult for some advisors to comprehend and adapt to
the demands and preferences of a younger generation of investors.

Second, many advisers have been reluctant to use mobile channels, accept new technologies,
and transition to new advising models that balance the use of both human and scientific
knowledge. This problem is difficult to solve, and many established WM companies engage in
training without seeing a big return on their money.

5. Regulatory Burden

Due to the range of their product offerings, WM firms have always had to manage operations that
are inherently risky. These products could include financing, capital markets, and investments.

Additionally, businesses like private banks and their parent corporations now face particularly
high expenses related to these risks due to the delicate nature and high profile of their client
base.

The regulatory environment has changed swiftly since the 2008 financial crisis, and its full impact
is yet unknown.

It is evident that the regulatory burden put on WM firms, their advisers, and their clients is
becoming more complicated.
6. Retirement Age of Investors

A recent study shows that retirement age has been gradually declining. The trend here is that
investors are preponing their retirement and yearning for early retirement.

Many investors only seek reassurance that they will be able to maintain their present way of life
in retirement. This leads to increased pressure on wealth managers as they need to accumulate
additional wealth within shorter span.

The process of delivering that assurance, however, is no longer as straightforward as it once was
due to factors like growing healthcare costs and worries about the viability of government
entitlement systems.

7. Expectations

Retail investors now more than ever anticipate having the same access to potentially high-yield
asset classes and techniques as wealthy, authorized investors.

The rewired investor does not wish to receive usual service anymore, as was already said.
Instead, given the low-yield environment that has followed the financial crisis, ordinary investors
are beginning to demand the same level of access to high-yield asset classes and strategies as
wealthy, authorized investors.

In years past, several start-up businesses have joined the market in response to the demand for
return and for access to best-in-class investment solutions, which until recently were only
available to institutional or high-net-worth clients.

8. Macro Environment

Both the financial crisis and its aftermath have significantly altered the climate for asset
managers and investors. Investors currently have to deal with a situation where there are high
inflation rates, and a falling pace of economic development.

Pandemic, monetary tightening by central banks have led to uncertainty. Investors now have far
less sense of direction than they had previously.

It might be interesting to read about Data Enrichment for Enriching Customer Experiences
How Digital Technologies are Reshaping Wealth
Management
Traditional wealth management is far from being the only service offered by modern wealth and
asset management, which includes a wide range of services.

The emphasis is on the specific needs of each individual customer. It could be a pension concept
that looks to the future. Perhaps it’s the selection of the best investment and financing for one’s
own property.

Financial service providers are urged to automate and digitize their operations to make sure that
comprehensive wealth planning is still scalable for many clients.

Only in this way will seasoned service providers be able to resist the demands of fintech and
technological giants in the future.
The fintech sector has already risen by 300% over the previous three years and is putting itself in
position to seize the new market opportunity.

Because of this, today’s experts in wealth management must keep pace with these disruptors.

How does Wealth Management Work?

Wealth management revolves around financial planning with a crystal-clear
objective of offering better returns on investments. Some broad pointers on how
wealth management works:

a) Your wealth manager will note your financial goals with specific timelines if any.

b) By probing with a wide variety of questions, they will figure out your risk
appetite.

c) Needless to say, you must provide details of how much money you want the
wealth manager to “manage” or invest.

d) At this stage, your wealth manager will draft an investment plan recommending
different asset classes, financial instrument, timelines and allocations.
e) Taxation will always be factored in so that you get the best possible exemptions
and rebates.

f) Once you approve the plan, your wealth manager would go ahead and execute
the same.

g) The investments are monitored and modified if the need arises.

Click here - What are Financial Assets?

Advantages of Wealth Management
There are several benefits of using professional wealth management methods. The
margins of error reduce because the dos and don’ts are clear.
a) Wealth management is customized to suit your need, objective, funds available
and risk appetite

b) It is a 360-degree service comprising tax advice, investment advice, legal

advice, retirement planning, accounting, and estate management.
c) Wealth management is more strategic than investment advice. Investment
advice is a subset of wealth management and is more tactical in approach. For
wealth creation, a holistic approach to strategic wealth management is needed.

d) If the magnitude of your assets is huge, the wealth manager will work alongside
a team of specialized wealth managers who have expertise in specific domains of
finance and investments.

Must Read - Passive Investing

Wealth Management Strategies
Earning money, creating wealth and managing wealth does not mean the same.
Some points to note:

a) Your primary source of income gave you considerable money because of your
expertise in your chosen profession.

b) You must invest wisely so that this income works by itself and generates wealth.

c) All along, managing this entire process is critical so that your money is safe,
growing and available at planned intervals/milestones.

A few pro tips for SMART wealth management:

1. Set Specific, Measurable, Attainable, Realistic and Time-Bound (SMART) goals.

2. Work on clear budgets

3. Diversify your investment

4. Stay clear of the bad debt or at least keep them to the minimum

5. Buy insurance to mitigate risks. Term insurance, health insurance, property

insurance etc should be in place.

Also Read - Online Term Plan

6. Work with reputed, credible, qualified wealth managers

Financial goals, plans, and aspirations change as you traverse through the journey
of life. Needs and wants are dynamic and therefore your wealth management plan
should adapt to your life stage. Retirement is the final stage and you most certainly
do not want to enter this stage with inadequate money in hand. Adopting different
strategies for different life stages is recommended:
Accumulation:

Start investing early on, in your career. Get your priorities right, have a clear
budget and stick to it. Do not buy things you don’t need. Invest the money instead.
Start planning for retirement. Invest in high-growth instruments such as equities.
Preservation:

If you haven’t covered your health and life with insurance, do so on top priority.
Balance your investment portfolio with equity and debt. The proportion of the
amount in debt should gradually increase as you inch towards retirement. Take
calculated risks because you will not have time to bounce back if your riskier bets
do not pan out as planned.

Distribution:

Time to reap the benefits of all the hard work, due diligence, financial prudence
and planning. Earn income from your investments in the form of interest pay outs,
annuities, profits etc. Keep ploughing back the surplus, if any.

Investment Options in India for Wealth Management

Each of the strategies described above has corresponding investment options that
can help you achieve the goals for that stage. Some examples of popular
instruments for each stage are listed below:

1. Accumulation Strategy

The focus is clearly on getting above-average returns and building a strong base so
that the power of compounding gives better returns in the medium/long run.
i. Mutual Funds/ELSS:

Mutual funds invest in equities and have funds focused on specific industries and
or stock indices. You can choose the type of fund depending on the risk appetite
and targeted return.

ii. Unit Linked Insurance Plan (ULIP):

ULIPs also invest in equity and debt just like mutual funds do. But ULIPs come with
additional advantages. ULIPs have an insurance cover that comes along with the
investment. Moreover, both the investment and the maturity amounts have tax
benefits which means you save money on taxes as well.

iii. National Pension System (NPS):

NPS helps you invest in a diversified and dynamic portfolio of equity, debt and
alternative assets. This automated portfolio investment reduces your portfolio risk
as you age and will ensure safe investments by the time of maturity. You can
withdraw up to 60% of the corpus as a lump sum and must invest the rest to
receive an annuity.

Recommended Reading - NPS Withdrawal Rules

Other than the diversified portfolios you can also consider buying stocks directly.
Stocks can offer huge value accretion over time as well as a possibility of dividend
income. Investing in Gold ETFs, and REITs (Real Estate Investment Trusts) will also
fall under this strategy. However, these investment options may not allow tax-
saving.

2. Preservation Strategy

Consolidation is the mantra here. The degree of consolidation will increase as you
progress through this stage and approach retirement.

i. National Savings Certificate (NSC):

NSC is offered by the Post Office and is very similar to the tax-saving 5-year bank
deposit. The rate of interest for an NSC is 6.8% which is a tad higher than the
current rate of interest for bank deposits. The lock-in period is 5 years and the
amount invested is deductible, from taxable income, under section 80C. Interest is
compounded annually and this annual interest can also be deducted from taxable
income. However, the interest amount receivable on maturity is taxable.

Also Read - Is Pension Taxable?

ii. Life Insurance Savings Plans:

Savings plans from life insurers offer guaranteed maturity benefits with bonus
additions for long-term investors. The plans also have a tax-free maturity and
investment. Thus, you can protect your wealth from inflation as well as taxes.

iii. ULIP/Guaranteed Return Plans:

ULIP plans offer you investment into safer debt funds. You can allocate 100% of
your funds to debt funds while enjoying the tax benefits on your investment. Even
when you had started with 100% equity investment you can later switch to 100%
debt in ULIPs. Tax benefits and bonuses ensure that your wealth is safe from
market forces, inflation and taxes.
Alternatively, you may invest in guaranteed return life insurance plans where the
return is assured so that you can predict the maturity value.

3. Distribution or Income Strategy

You need the money at this stage. Moreover, you need guaranteed cash flow post
retirement when your income from employment or profession will dry up.

i. Life Insurance Annuity:

An annuity is a long-term investment wherein your contributions are converted

into periodic payments that can last for life. In addition, you also get a life
insurance cover.

ii. Bank and Post Office Fixed Deposit (FD):

Both bank and post office FDs give almost the same rates of interest. If one is
highly risk averse, FD is the right choice for investment. The interest rate hardly
beats inflation but the person is assured that the money is in safe hands.

Unless one is investing in the 5-year tax-saving FDs, you will not get any tax
benefits for other FDs. But you can receive a defined sum into your account as
interest payments.

iii. Monthly Income Plans:

Monthly income plans are mutual funds which aim to provide a monthly income
pay out. These funds invest in blue chip stocks to generate income through
dividend payments.

Your current state of finance portfolio is important when planning your wealth
growth strategies. Keep a holistic view when investing and have the patience to
stay invested. Hiring professional wealth managers to help you make decisions
basis concrete data and preclude you from making costly mistakes. Factoring in
constraints, opportunities, goals, and personal circumstances is essential when
drawing a wealth management strategy.