Private Wealth Management and its Increasing Popularity

What is Private Wealth Management?

As the name suggests, the planning and management of finances of private individuals is known as private wealth management. This is also known as family office. The financial adviser for private wealth will be entrusted with the job of taking care of the wealth of the individual and enhancing it with proper investments and accounts system. The clients are mostly private individuals who have a ultra high net worth. They also have financial goals that has to be achieved and this is handled by the management company or advisor.

Who offers wealth management service to individuals?

Large banks have several financial schemes for individuals that will help them to make wise investments. But the successful and popular individuals do not have the time to look into these schemes and they entrust the job with wealth managers. They manage all the finances of the high net worth individuals. The manager once employed by the individual will have to understand the financial goals of the person and help attain the same. The basic investment strategy will be explained to the client and henceforth the advisor will carry out all investments in the interest of the investor based on the strategy discussed.

Why is there a need for Family Offices?

The concept of private investment advisors has gained popularity recently and the current estimates state that there are about 3500 families which rely on private investment managers to handle their finances. Looking at the situation years back, it can be found that affluent American families had entrusted their finances with banks and trusts. But the result received from these were not satisfactory. In the new system, all the money matters of the family is handled by the family office which takes care of the money allotment, charity funds, insurance, tax, business investment and wealth transfer to generations.

What are the different kinds of Family Office?

Sometimes a single family will employ a range of experts like tax planner, accountant, bookkeeping staff and investment advisor. This team will work for the specific family taking care of the financial activities. With single family offices, the purpose is to serve a single wealthy family with the team. But the cost of maintaining a SFO can be too high and can even go up to $2 million per year.

Multi family offices work more like the traditional wealth management companies. They will have several wealthy families as clients and the team works on investments in top notch companies. There are yet different kinds of clientele. The simpler ones will just require the multi family office to take care of the bookkeeping and accounts management of the family which may be worth below $1 billion. For individuals who have a net worth value above this will require the agency to take care of all aspects of finance handling.

Responsibilities of the Private Finance Management Office

• Managing the finance of the wealthy family and making the right investments. This ensures that the wealth is maintained and increased over generations of proper planning.
• Real estate investment and investment in direct self owned businesses are also seen as investment methods and this is also handled by the agency.
• With such huge amounts to handle, the family office will keep proper and transparent accounts and bookkeeping and make it available to the family members at any time.
• The agency keeps proper knowledge of the US tax code. All the tax, insurance and trust planning is performed at the right time and carried on in the scheduled manner to prevent any later disputes with the US law.
• Charity givings are very common in US wealthy families. This is coordinated and neatly documented for legal and future reference purposes.
• Wealthy families mostly own a family business. Some family members will be taking care of the business and its operations while others may not. But they do have shares in the business. Improper handling of the business capital can create issues and therefore the family office work as an intermediate keeping records of business management and shares.
• The family office will also take care of the intergenerational conflicts. Such conflicts do arise at some point of time in any family and with wealthy families, it becomes much complicated and a matter of publicity. Such unwanted situations are handled by the professionals in the management agency or even outsourced for a better approach.
• The office also takes care of the education of the younger generation.
• All the various bills, checks, travel packages, purchase and management of property and other day to day financial details are also handled by the agency.

Increasing Requirement for Private Wealth Management Company

In recent times, several factors has lead to the rise for the need of finance management for families and individuals.

• There is a prominent increase in the individuals list under the ultra high net worth class. The wealthy class are attaining more and more wealth and this has added several new names to the list of high net worth individuals. The list now includes people from China, Russia, Brazil and India and this increase has directly reflected upon the increase in demand for family offices.
• With the increase in wealth, the families will look for more reliable services and they are ready to spend a good amount as fees in return for premium wealth management services. The requirement by the wealthy families is to ensure that their enmassed wealth is under the guidance of experienced professionals who can handle it with high profits and low risk factors.
• The affluent class have to manage self owned businesses, properties and their related taxes. Managing all these is not possible on their own and they need a team to work for managing their personal and family finances.
• With such a high pay scale, the individual wealth management offices will offer much advanced services and even add more services according to the requirement. They work in a flexible way and such options are not offered by banks or traditional wealth management agencies.

Conclusion

It is an advantage for wealthy families to get their investments and other finances handled by professionals in the field. Www.findawealthmanager.com is platform which can be used to find the wealth management company to match with the specific requirement of the individual. With the increase of such multi family offices offering service to individual financial needs, the companies will bring up more positive changes in their operation to meet the competition.