India has been seeing a significant rise in the number of HNIs and ultra HNIs over the past few decades. This has given a boost to the wealth management services market which provides appropriate investment support to such investor classes. But, it is important for mass affluent investors, HNI, and ultra HNIs to pick the right wealth management companies.
What are the factors to consider while choosing a wealth manager or a wealth management company that can handle the entire investment portfolio? Here are a few considerations that can help answer this question.
What is wealth management?
Wealth management is a specialised financial service for individuals and families to help build, preserve, and transfer their wealth. It combines investment advice, financial planning, and other financial services with the aim of meeting the client’s financial goals. Financial institutions such as banks and investment firms provide these services. The objective of wealth management is to create an investment portfolio that meets the individual or family’s needs.
These services are primarily used by high-net-worth and ultra-high-net-worth individuals.
What are the factors to consider while choosing a wealth management company?
Some of the factors that HNIs must keep in mind while choosing a wealth management company are:
- Services offered
Wealth management services provide comprehensive services for their clients and act as a one-stop shop to meet all their needs. Therefore, it is important to review the kind of services offered by the wealth management company and the scope of its operations before selecting such a company.
- Experience and expertise of the wealth manager
A wealth manager is a highly skilled personnel that has a deep understanding of different investment options and can contribute efficiently to the wealth-building journey of an individual. The wealth manager is considered to be the driving force in achieving financial goals. Hence, their experience and expertise are of paramount importance and a crucial consideration while selecting a wealth management company.
- Fees and other charges
The fee structure for wealth management services is not standard and varies depending on factors like services offered and the internal policies of the wealth management company. It is important to understand the fee structure and other related charges.
Reviewing the reputation of the wealth management company becomes of paramount importance before availing of its services. The key concerns to be addressed include privacy and meeting the unique needs of the clients.
- Access to different investment avenues
Wealth managers offer access to a variety of investment options, such as stocks, bonds, mutual funds, derivatives, and hedge funds. It is important for clients to evaluate the wealth manager’s offerings before making any decisions.
- Communication and personalised approach
Wealth management companies must keep the clients informed on their investments, portfolio performance, and other relevant information that could possibly have an impact on the overall portfolio. .
Clients should also check the technological support/platform for quick access to their investments, and insights so they could track their investments. For example, Fisdom Private Wealth offers a Wealth dashboard to their Massaffluent and HNI clients.
Feature of Fisdom Wealth dashboard:
- Real-time and holistic view of your portfolio
- Customisable web and mobile dashboard
- Add family members and build a family portfolio
- Get unique insights and in-depth reports
What are the functions of a wealth management company?
Wealth management services in India are gaining popularity among high-net-worth individuals (HNIs) and ultra HNIs. These companies offer a range of services to meet the diverse needs of their clients, including
- Investment management
This is one of the prime functions of a wealth management company. It involves developing an investment strategy that is aligned with the client’s goals, their personal risk tolerance, and investment horizon.
- Tax planning
Wealth management services in India provide efficient tax planning solutions to HNIs and ultra HNIs, who are often concerned about high taxation rates in the country. Optimum tax planning is a sought-after service that helps clients achieve their wealth creation goals.
- Insurance planning
This function focuses on helping individuals and families protect their assets and manage financial risk through various types of insurance products. Wealth management companies analyse individual financial situations, identifying potential risks that could impact their financial security and recommend various types of insurance products that can help mitigate these risks.
- Risk management
Risk management strategies used by wealth management companies include diversification, asset allocation, and other risk management techniques that are aimed to reduce the overall risk for the client.
- Estate planning
Estate planning services offered by wealth management companies refer to managing all their tangible and intangible assets and creating a sound portfolio. Many HNIs and ultra HNIs also opt for family firms that cater to all financial needs of the family and also create a trust for efficient tax planning and estate planning as well as distributing a person’s assets as an inheritance.
Philanthropy is a huge part of wealth management services and it helps in meeting the clients with their specific charitable endeavours like setting up a foundation or trust and catering to the philanthropic needs aimed by the client.
- Relationship management
One of the key aspects of wealth management companies is to provide personalised service to their clients and build long-term relationships with them. It is their responsibility to communicate with their clients on a regular basis and provide them with timely access to their accounts and investment performance.
Wealth managers work closely with their clients to develop a comprehensive financial plan to meet their individual needs after assessing various factors like investment goals, investment horizons, risk appetites, and income at disposal. Therefore, selecting a wealth management company that meets all the unique individual parameters is crucial for successful financial and legacy planning.
Yes. The reputation of wealth management companies is one of the most crucial considerations in selecting a wealth management company to meet the individual financial needs of HNIs and ultra HNIs.
Yes. One of the biggest USPs of wealth management is catering to the diverse needs of clients under a single roof. Therefore, it is important for wealth management companies to provide comprehensive services like tax planning, estate planning, providing financial advisory services, insurance planning, and more.
Wealth management services are costly compared to traditional investment management. The fees charged by wealth management companies are typically a percentage of the assets they manage, resulting in a substantial cost.
The target customers of wealth management companies are typically the HNIs and companies with high net worth.