Private wealth management is a specialist service offered to high-net-worth individuals who want expert advice on maximising their assets, securing their financial future, estate planning and minimising their tax liability. Here’s what you need to know.
What Is Private Wealth Management?
Private wealth management is a very specialist type of financial advice designed for high-net-worth people, organisations and families. It takes standard financial planning to the next level and looks at how to maximise substantial assets and large investment portfolios.
Who Delivers Private Wealth Management Services?
These services are delivered by investment advisors and certified financial planners. They might work as part of financial services bodies or a London law firm. Often, even where city-based financial planners are independent or tied to investment companies, they will work with a London law firm on the legal aspects of wealth management for an integrated service.
What Sort of Things Do Advisors Do?
Private wealth management is highly individualised and will encompass various assets and management strategies covering stocks, real estate, bonds and alternative investments. The service will cover tax efficiency, philanthropy, wealth growth, income generation and risk mitigation. There will also be key areas such as retirement planning, estate planning and succession planning to ensure that wealth can transfer across the generations.
What Is the Link Between Private Wealth Management and the Law?
Many of the strategies put forward by the financial planner will need a deep understanding of legal frameworks. For example, tax efficiency planning might involve setting up trusts, offshore funds or even companies that work to maximise asset value and minimise tax liabilities. This kind of tax planning is very popular with high-net-worth individuals who pay for expert advice.
How Is This Service Paid For?
Wealth management providers usually charge a percentage on the portfolio that they manage for their clients as well as transaction fees. These services can be expensive, but their value will exceed the cost and ensure that the client’s wealth is safeguarded and grown in line with their expectations, with effective tax and succession planning assured.
How financial planning and investment management fit in
Private wealth management builds on ordinary financial planning, the process by which individuals and families plan for their future. Financial planners may work independently and serve individuals, families, students and other institutions, and some also advise businesses.
A planner’s role often reaches beyond budgeting. It can include estate planning, asset protection and retirement planning, all aimed at helping clients reach their long-term goals through careful planning. Experience and knowledge matter, and many planners hold qualifications in business administration, finance or accounting.
Investment management is another branch of the same discipline. It involves the systematic organisation of a range of assets, such as shares, bonds and property, to meet the specific objectives of the investor. Professionals in this field use investment policies and practices to give clients the information they need to weigh up the risks and rewards of each choice, which is a large part of what wealthier clients look for from their advisers.
Age, experience and independence in an advisor
Beyond specialism and investment approach, three details are often overlooked when choosing who manages your wealth. The first is age. For retirement planning, an advisor a few years below retirement age has likely thought through their own options and understands yours, without being so close to retiring that you must soon find someone new. A clear succession plan, or a younger colleague who will take over the portfolio, reduces that concern.
The second, and arguably more important, is experience. Every advisor should be on the FCA register and properly accredited. Look at how long the firm has been established in financial planning, then at the qualifications and background of the individual advisor.
The third is independence. A fully independent advisor has access to the whole market and is not tied to particular investment managers or structures, so the portfolio can be built around your own needs and appetite for risk. Together, these three factors point towards advice that serves your interests over the long term.