Wealth Management -An Holistic Financial Planning

Created on 10 Apr 2020

Wraps up in 4 Min

Read by 4.4k people

Updated on 16 Sep 2023

From the game of monopoly to people in real life, we have seen that once a person gets rich, he tends to get richer. Once they can obtain some wealth, they can amass more by putting already accumulated wealth to work. Though these rich people must be ace in their fields, they might be well-read, yet investing and maintaining wealth is not everyone’s cup of tea. For instance, a person might be a great entrepreneur but not all entrepreneurs are great finance analysts or investors or possess the best knowledge of tax saving. Here is where wealth management comes into play. This piece is about wealth management and likewise importance this field is gaining.

The Wealth Management

As mentioned, people become rich from different walks of life. Although, they are best in their domains, they need external help to handle financial matters. This is beneficial for them in two ways. One, they can keep the focus on their core activity of specialization. Virat Kohli might become a sound investor after studying, but the Indian Cricket team needs him more. Second, they get expert advice. These experts come with vast experience that can enhance the current wealth of the client. Wealth management companies or wealth managers advise their clients in the matters of wealth. While most of the advisories deal with financial aspects like investment and taxation, it may also range into services like brokerage accounts, retirement planning, and even legal services. Some also provide services like ‘discretionary account’ where the wealth management firm performs investment on behalf of the client.

Why is it gaining importance?

While now we know that wealth management companies provide a variety of services, they provide several inherent advantages. This is the reason they are gaining popularity, especially amongst the richer individuals.

First, it is holistic. It encompasses all the aspects of the life of the individual. Hence, the individual need not consider different advisors for a different reason. For example, Virat Kohli’s wealth management firm must have looked at all the aspects of his life. It involves his earnings other than match fees from cricket, his family, even his potential retirement age. Then they would provide him financial plans for everything. Be it his retirement, his current entrepreneurship goals like ‘Wrogn’, or his vacation plans. 

Second, they work according to the specific goals of the client. The advisor needs to know the expectations of the client. For example, one would want enough money to travel the world after retirement. So his retirement plan would be calibrated keeping that final value insight. Similarly, if someone wants to send their children to study abroad, based on time left and the expenses that have to be paid when they go to college, the advisor will tell them how much should be invested today.

Also, they look after other factors as well. If Virat Kohli tells the company about his goals, they also see how much risk he is ready to take when investing. Summing up on all things they would come up with a proper plan that clearly shows what amount shall be invested where. Moreover, Virat Kohli is just 31 years old and recently married. His life would keep changing in the time to come. Therefore, these advisors keep meeting him and recalibrating his plans according to his changing needs. Hence, one can see that the plans by the wealth managers are tailor-made.

Third, they bring in domain expertise. This becomes important for investors as it brings the added advantages associated with the investments. For example, if Virat Kohli wants to buy a mansion in Dubai, the wealth managers will try to come with a plan that is legally clean, minimize expenses, and saves taxes. For all this, they need some clever minds at work that the wealth management company shall provide.

The Business Side

The major factors that drive the wealth management business are trust and expertise.

The rich people have toiled hard to be where they are. They want to invest and invest a good amount, but only when they are sure of the people they are going ahead with. There are several cases of fraud that we hear where the rich were duped. Just last year, Rahul Dravid, Saina Nehwal, and 800 others were allegedly conned by ‘Vikram Investment Company’.

Other is expertise. When the wealth increases, the legal and financial complexities increase too. There is a pushing need for diversification at levels not required for general investors. The advisory service should be comprehensive, as well as it should help the clients achieve their goals. This has led to an increase in wealth management companies in India because those who establish their name and credibility for once, they set a strong foothold. If the two factors mentioned are managed well, the wealth management company shall prosper because people are ready to give money provided the advice is good.

Winding Down

Wealth management helps people take up investing at an early stage. This helps most people take advantage of their current wealth and multiplying it manifolds.  The companies offer expertise and tailor-made investments and management plans that cater to clients individually. The credibility factor does play a role in their establishment but once they set their foot, they have shown to prosper exponentially in later stages. With the rising number of high net worth investors and aware young investors with money in hand, wealth management companies are carving their way in the Indian market and will continue to do so for an indefinite period. 

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Vivek Tiwari

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Vivek Tiwari is a Software Engineer and a Data Scientist who hopelessly fell for Economics. His plans to move to Management might now save mankind from his IITJEE selection story.

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