Are you expecting to come into, or have you recently come into significant wealth? If so, you may be wondering how to best manage that wealth—and which professionals are best suited for the job. Private wealth management (and private wealth managers and advisors) might be the right fit for you.
Private wealth management involves comprehensive financial planning and customized solutions tailored to the unique needs of high-net-worth and ultra-high-net-worth individuals and families. Private wealth management encompasses a broad array of specialized services designed to manage, grow, and protect significant wealth, as well as complementary services that enable families to enjoy their wealth to the fullest. The goal is to ensure that every aspect of a client’s financial life is meticulously managed and planned for, allowing them to focus on their personal and professional endeavors.
Private Wealth Management Services
Private wealth management is typically offered by specialized wealth management firms that provide a multi-faceted approach to investment management, financial planning and advisory services, estate planning, family governance and education, among other services.
- Investment Management: Within private wealth management, this involves creating a diversified portfolio of assets tailored to the client’s risk tolerance, financial goals, and time horizon. Private wealth managers use advanced strategies, including alternative investments like hedge funds, private equity, and real estate, to generate returns while mitigating risks.
- Financial Planning: Comprehensive financial planning is critical to address a client family’s long-term goals, including robust estate planning and tax optimization strategies. Private wealth managers focus on creating highly customized plans to help ensure financial stability and growth across generations.
- Tax Planning and Optimization: High-net-worth and ultra-high-net-worth individuals and families often face complex tax situations. Private wealth managers employ sophisticated strategies to minimize tax liabilities, with the goal of helping clients to retain more of their wealth. As the saying goes, “It’s not what you make. It’s what you keep.”
- Estate Planning: Effective estate planning ensures the smooth transfer of wealth to heirs and beneficiaries. This includes drafting wills, setting up trusts, and planning for potential estate taxes. Sophisticated estate planning is a cooperative exercise—your private wealth manager working along-side your legal and tax advisers.
- Risk Management: Protecting wealth is as crucial as growing it. Private wealth managers assess various risks, including market volatility, economic downturns, and personal liabilities, to safeguard their clients’ assets for the long term.
- Philanthropic Planning: Many wealthy families wish to give back to society and the causes they care about. Private wealth managers should be able to help design and implement philanthropic strategies, such as setting up charitable trusts, donor-advised funds and foundations.
Why Private Wealth Management?
Successful families are attracted to private wealth management because of the personalized service and comprehensive approach it offers. These families have complex financial pictures, which require nuanced solutions from deeply knowledgeable wealth managers.
- Holistic Approach: Unlike most financial advisors, private wealth managers take a holistic view of their clients’ finances. This means considering all aspects of their financial lives, including personal goals, family dynamics, and long-term aspirations. The planning is often done through a multi-generational lens, as the amount of wealth managed can last well beyond the life of the wealth creator.
- Continuity and Stability: With a focus on long-term relationships, private wealth management firms provide continuity and stability in financial planning and investment management. This is particularly important for multi-generational wealth planning—helping to ensure the good financial health of future generations is essential.
How to Choose a Private Wealth Manager
Managing the complex financial needs of successful families requires a deep understanding of various financial disciplines, an innate ability to navigate complex family dynamics, and an ability to provide sophisticated solutions that are specific to a family’s needs. Therefore, families should seek out private wealth managers who can demonstrate the following:
- Proven Track Record: It is important to work with private wealth managers who have a proven track record of working with other successful families with similar complexity. Spend some time evaluating the firm’s website: do they offer insights from their subject matter experts in a resource section? How do they speak to you as a prospective client, and the services they aim to provide? Asking for case studies and potential client references, as well as inquiring about their current client base and how they serve clients in similar financial situations are other good places to start.
- Adept at Communication: Communication is key in any relationship, and that is especially true for private wealth managers. Whether that is creating customized reports specific to a client, preparing for quarterly meetings, or simply staying on top of developments within a family, frequent and clear communication is essential. Work with a private wealth manager who can successfully communicate across the generations of a family in a way that everyone can relate to.
- Building Relationships: In addition to being deeply knowledgeable about investing, estate planning, tax mitigation strategies and more, private wealth managers should be just as skilled at building and maintaining strong relationships across client families, often involving multiple generations. This involves regular communication, trust-building, and understanding the family’s evolving needs and goals.
In summary, private wealth management is a sophisticated, deeply personalized service designed to meet the complex financial needs of high-net-worth and ultra-high-net-worth individuals and families. By offering a comprehensive suite of services, private wealth managers aim to help their clients achieve financial security, growth, and peace of mind.
