Wealth Management Explained

How Banks Work, Part 9: Wealth Management. In the penultimate episode exploring how banks work, we are focusing on wealth management. Simply, wealth managers within a full-service bank provide a holistic range of services from investing and tax planning to estate planning and charitable giving. On behalf of high-net-worth individuals. These are usually individuals with over $1 million of investable assets. Wealth management serves as the most comprehensive relationship between a financial professional and an individual or family. A typical relationship between a wealth manager and a potential client starts with a lot of introductory relationship-building meetings, moving on to a more comprehensive exploration of the client's client's financial position and future goals. From here, the wealth manager builds up a comprehensive plan covering all key areas of investing and estate planning. Once an agreement has been reached, assets are transferred to the wealth manager, who will manage according to the agreed-upon plan. Now, wealth management is a very attractive source of revenue for major banks, with fees on assets under management ranging from 0.5% to upwards of 1%. High sense, and relationships typically lasting for many years, it is no wonder why some of the world's largest banks are putting more resources into the stable, high-visibility nature of wealth management. Although attractive, running a large wealth management operation does come with risks. The complex multi-jurisdiction nature of many clients requires wealth managers to be diligent in their advice and management. Furthermore, relationships between individuals and wealth managers can become too close, with clients putting pressure on management to become too creative with their planning and allocation. In response, banks have spent decades improving their anti-money laundering and know your customer systems and policies to avoid managing wealth built from illegal means.