Wikipedia of Finance - Wealth Management and Private Wealth Management Definition, Types, Examples

Wealth Management and Private Wealth Management – Definition, Types, Examples


Investment management, tax planning, estate planning, retirement planning, and risk management are all included in the intricate process of wealth managing. In order to deliver individualized solutions based on each client’s unique goals, risk tolerance, and time horizons, it integrates several financial disciplines. Through proactive management and intelligent asset allocation, wealth managers seek to enhance wealth development, preserve capital, and facilitate the achievement of long-term financial objectives.

PWM, or private wealth management, caters to wealthy individuals and families with substantial asset holdings. Rich clients’ diverse wants and preferences are catered to through an exclusive and highly specialized variety of services offered by this field of wealth management. Private wealth managers work closely with their customers to comprehend their unique financial situation, aspirations, and legacy concerns.

Wealth Management Definition

A professional service provided by wealth managers which includes investment planning, accounting, tax planning, estate planning or retirement planning, portfolio and financial services management provided to business owners or a corporate for one set fee is called wealth management.  When this professional services are provided at international level to businesses or an organization, such wealth management services are termed as global wealth management.

Wealth Management Example

Let’s take an example of wealth management to understand, for instance – professional who are daily dealing with various investment options have much better knowledge of investment, market strategies or portfolio management than any other.  They offer best wealth management options to their clients and in return they charge for their wealth management services.

Types of Wealth Management Products and Services

Below are few important from the list of wealth management products and services offered by wealth managing professionals are:

  • Structured Investment Products.
  • Private Banking and Services.
  • Traditional Investment Products (Like: Mutual Funds, Equity, Banking Accounts, etc.).
  • Estate / Retirement / Insurance Planning.
  • Personal / Private Wealth Management.

Private Wealth Management Definition

Private wealth management is the term used to describe the provision of financial planning, portfolio management, and other aggregated financial services within investment advisory practices for private individuals. As the name term itself clarifies the definition, private wealth management doesn’t account for corporations, trusts, groups or other types of clients. Private wealth management is also termed as personal wealth management as well.

Imagine you being a private client who is located in India. If we consider your perspective or that of an average private client, private wealth management involves resolving or increasing your financial situation and achieving your short-term, medium-term, and long-term financial goals. Also, it is the practice of a full assortment of financial products and services to a well-heeled client as a financial consultant so that the clients can attain specific financial goals.

Private Wealth Management Example

A well-known example of private wealth management is J.P. Morgan Private Bank, which offers a variety of services catered to wealthy individuals and families. J.P. Morgan Private Bank offers individualized investment strategies, estate planning, philanthropic advisory, and access to exclusive investment opportunities.

The bank has a long history of excellence and a global presence. The bank’s seasoned advisors utilize its vast resources and experience to offer customized financial solutions. These solutions are tailored to meet the unique needs and objectives of wealthy clients. J.P. Morgan Private Bank exemplifies Private Wealth Management at its best. It focuses on quality and pays close attention to every little detail.

Types of Private Wealth Management Products and Services

Personal Financial Planning

One of the popular private wealth management services includes personal finance financial planning. Personal financial planning involves a comprehensive and systematic process. Finance managers and their team assess the client’s portfolio or financial status. They develop a financial plan based on the client’s goals, the finance planner’s capabilities, and the assessment of the client’s net worth.

Financial planning involves allocating revenue to cover various life expenses based on individual goals and plans. Each person has different financial needs and aspirations. Some prioritize paying rent, bills, or managing school fees for their children, among other utilities.

A robust financial plan not only helps pay your bills but also allows you to save some part of your income for short-term and long-term emergencies. To accomplish these goals, individuals need to follow specific steps or algorithms to organize their finances. This involves curtailing expenditure and optimizing savings for the future. A financial plan should not be confused with an investment plan, except for some rare cases.

Wealth Management Assessment

To accomplish a successful private wealth management, financial assessment becomes ubiquitous and it is essential to attain the desired goals. It is the process of compiling basic accounts of financial statements like cash flow, balance sheets and income statements. A personal balance sheet entails assets like, car, stocks, clothes, house, and bank account along with personal liabilities such as credit card debt, bank loan and mortgage.

A personal income statement lists personal income and expenses. Such financial assessment is used to evaluate an individual’s contribution towards your income versus expenses. A person earns INR 30,000. He plans his personal budget so that he can contribute 20 per cent into savings and 80 per cent into expenses. This is a basic example of financial assessment. You can set the desired goals only after you have the assessment sheet of your private equities.

Goals Setting and Accomplishments

It’s crucial to establish primary financial objectives or goals since they guide us in the right direction. Each individual sets goals for their life. Some aim to retire early and construct their dream house. Others prioritize saving for their children’s higher education. And there are those who aspire to pay off their entire mortgage and achieve freedom from debt. As mesmerizing as it sounds, let us not lose the touch of practicality.

The services of private wealth management services can be rendered by either larger corporate entities, independent financial advisers or multi-licensed portfolio managers. The latter on normally prioritizes the high-net-worth private clients.

Banks and brokerage houses typically offer various investment services and products to individuals, leveraging their financial resources and expertise. However, private individuals often lack the time, effort, or sufficient knowledge to manage their finances effectively and allocate assets appropriately.

Wealth managers who specialize in managing the finances of private individuals help these individuals and make up for what may be lacking. They guide the clients through the services and products that will help them enhance their wealth. These services often cater to high-net-worth individuals (HNWI).

The wealth manager hired then sits down with the private individual and details himself with the current financial status of the client, his potential needs and then comes up with way that will help him attain the desired goal. Wealth manager is responsible for generating revenue through client’s investment.

Read E-Learning Tutorial Courses - 100% Free for All

How useful was this post?

Click on a star to rate it!

Average rating 4.9 / 5. Vote count: 48

No votes so far! Be the first to rate this post.

We are sorry that this post was not useful for you!

Let us improve this post!

Tell us how we can improve this post?

Leave a Comment

Your email address will not be published. Required fields are marked *