India is a growing market for private wealth management. This space was traditionally thought to be centered on big business families in developed countries. However, in the last few decades India has seen a significant rise in the number of HNIs and ultra HNIs. This has further resulted in increasing demand for private wealth management services that can manage and help in growing the income of such individuals.
As the concept picks up pace in the country, let’s find out more about what private wealth management entails and what are some of the benefits that it offers.
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What is private wealth management?
Private wealth management involves management of financial assets of High Net Worth Individuals (HNIs) and Ultra HNIs. There are many services that come within the ambit of private wealth management. Some of these services include personalised investment advice, estate planning, tax planning, financial planning, insurance advice, etc.
Private wealth management uses parameters set by their clients like risk tolerance, investment goals, investment corpus, etc. to curate a wealth management plan that aims at maximising the returns to meet such goals.
What are the benefits of private wealth management?
Some of the benefits of private wealth management services are:
- Creating personalised wealth management plan
Private wealth management allows clients to get access to personal investment advice that is essential in navigating investment risk. Private wealth managers provide unique solutions to their clients and help them in creating financial plans and assets that are instrumental in meeting their investment goals and effective portfolio management.
Private wealth management services help in diversifying the investment portfolio and include different asset classes like equity or equity-related instruments, debt, real estate, alternative investment funds, fixed income investments, etc. This diversification ensures efficient wealth management and helps in keeping the overall risk within acceptable limits.
- Tax planning
Private wealth management services also include tax planning which is crucial for HNIs and ultra HNIs. This allows them to build strategic assets that not only contribute to long-term wealth management but also help in reducing the overall tax burden. A private wealth manager helps in effective tax planning and ensures compliance to legal and financial aspects.
- Estate planning
Private wealth managers help in the creation of trusts and managing the family finances as well as the creation of a will for efficient passing down of the assets through inheritance. The creation of a trust ensures that the finances are managed in the intended manner and are not misused or accessible to unintended users. Furthermore, estate planning is also in the line with effective tax planning which is a crucial division or arm of private wealth management.
- Time saving
Wealth management can be a time-consuming and complex procedure, especially for ultra HNIs with substantial assets. Private wealth managers can take on the day-to-day tasks of managing investments, handling financial paperwork, and other ancillary actions like coordinating with other professionals such as tax attorneys and accountants, allowing clients to focus on other priorities.
- Expertise of professional wealth managers
One of the biggest benefits of using private wealth management services is access to professional wealth managers who have the necessary experience and expertise to handle the requirements of HNIs and ultra HNIs. These professionals can help in curating financial plans that can meet the unique requirements of their clients at the same time ensure quality portfolio management.
- Single point of contact
Private wealth management provides multiple services under a comprehensive package, covering a wide range of financial needs. From investment management, retirement planning, tax planning, estate planning, and philanthropy, these services adopt a holistic approach. This ensures all financial needs of the client are answered under a single roof and financial decisions are well-coordinated to achieve the client’s goals.
Private wealth management is a very specialised stream of managing finances and assets for individuals with substantial financial resources at hand. The benefits of private wealth management allow the individuals to ensure an up-to-date investment portfolio along with getting other supportive services like tax planning, legacy planning, real estate, financial advisory, and more under a blanket service provider thereby eliminating the hassles of dealing with multiple entities for such needs.
The top considerations while opting for private wealth management services include fee structure, services provided by the firm, experience, and expertise of the wealth manager, reputation, etc.
Private banking also provides customised banking and investment solutions to HNIs similar to private wealth management, however, the latter is a more comprehensive approach toward wealth management.
Some of the services provided under private wealth management include tax planning, estate planning, legacy planning, risk management, insurance planning, etc.
Fees for private wealth management are charged based on the proportion of the assets they manage for their clients.