Wealth Management: A Comprehensive Approach

Wealth management is a practice model, a mechanism for delivering advice. But, just as important, it is a comprehensive approach in which advice is provided by multiple specialists, including money managers, accountants and attorneys. Some of these specialists may be on staff, while others may be external to the organization. In all cases, however, advice is customized, taking into account many facets of the investor's life, but with an emphasis on service and communication.

This practice model was developed during the late 1990s, a time of great wealth creation. From a market perspective, this period is referred to as "the bull acceleration period." At the beginning of this period, on January 2, 1990, the Dow Jones Industrial Average started at 2,810.14 and closed the year 2000 at 11,522.56—near its all-time high. The trends that began in the 1980s really began to take off in the 1990s. As banks and securities firms competed for each other’s territory, the outcome for an investor was positive: expanded services and better pricing. Firms and investment professionals were then positioning themselves as wealth managers, trying to convince their clients that they should consolidate their business with one firm; most were attempting to demonstrate to a client why they, should be chosen as the "primary fiduciary."

Throughout the years, the wealth management industry has become increasingly complex and dynamic. Financial firms have grown and have changed their overall philosophy of doing business from providing core services within a select discipline (banking, insurance or investment management) to providing fully integrated wealth management platforms. Although the exact level of client wealth may vary by practice or firm, it is generally only high-net-worth individuals and families who are an appropriate target for wealth management due to the significant cost structure of and time requirement for delivering complex, customized services.

Focusing on developing deep relationships with the high-net-worth investor has the potential to increase your revenue streams if executed properly. In fact, the principals in established wealth management practices tend to have higher revenues than those in other types of firms.


 

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