How do Wealth Managers Oversee Clients’ Funds?

How do Wealth Managers Oversee Clients Funds

You are probably familiar with the Netflix special Billions giving us insights into the world of the super-rich. It certainly leaves us wondering how household names like Elon Musk worth 274.3 billion USD according to Forbes 2022 rich list, and other billionaires such as Warren Buffett, Bill Gates, Larry Ellison, and Larry Page all have so much money, that managing such wealth is not a one-man job. These guys own superyachts, multiple homes, private jets, collections of cars, gold, private companies, charity donations, and moreover still have piles of cash stashed away. To manage all of this it takes a team of people working full time on managing such vast sums of wealth.

In other words, when you are worth millions or billions, you can stop managing your wealth, stop logging onto your online banking, or constantly checking your crypto or stocks because you can afford to outsource. And these services are not only extended to billionaires but also to millionaires. Even the likes of Leonardo DiCaprio, Liverpool, Japan football pro-Takumi Minamino, and famous comedian Dave Chappelle worth millions all need a financial management firm to manage their wealth.

Now we know why wealth management companies exist, the big question most people have is how do wealth management funds invest and/or manage the wealth of their millionaire and billionaire clients?

Investment Strategies to Sustain Growth

A wealth management company creates an investment strategy with the goal of making more money. E.G., sustained growth. There are also several variations of wealth management. For instance, southpasspartners.com is a great good example because the company clearly lists its investment services as follows:

  • Investment advice (consulting)
  • Asset management
  • Private offshore wealth management
  • Legacy planning
  • Protecting Wealth
  • Portfolio Structuring

3 Key Areas Most Wealth Management Companies Offer Services

The 3 most common services offered by a wealth management company are as follows:

  • Investment portfolio management
  • Inheritance tax
  • Estate Planning

Probably the most interesting of the 3 main wealth management activities is investment portfolio management. This is where all the action happens in terms of stocks, shares, crypto, and business investments. However, the diversity of the investment portfolio usually depends on several factors, one of the most important being the size of the client’s wealth. Obviously, the more money available to invest, the more diverse the portfolio can be.

Some of the strategies used by wealth management firms include:

  • Traditional stockbroking
  • Discretionary portfolio management
  • Independent wealth planning

Types of Wealth Management Funds

Another factor to consider is the type of wealth management required. The wealth of the person requiring this service will often determine this.

  • Regaining control after divorce
  • The Situation or Source of Wealth

Source of Wealth Determining the Types of Services Needed

The final factor that can determine the type of wealth management required is the source of the client’s fortune. Here are just a few examples.

  • Planning finances after a bereavement
  • Coming into money (Inheritance/Gambling or Lottery Winnings)
  • Sale of a company
  • Wealth growth requires management
  • Professional sports contract

There are a host of reasons people can become wealthy which are either gradual or sudden. Think of all the ways people can become wealthy suddenly or gradually, and when that wealth grows into the millions, quite often the services of wealth management are needed.

Is Wealth Management only for the Affluent?

In some ways yes, it is, but this also depends on the level of wealth we are talking about. Let’s just say you do not need to be a millionaire to request wealth management services or advice. However, certain levels of wealth are required, and in some cases, advice from a financial advisor, which is effectively a wealth management service itself, is enough.

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