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Wealth Management
Wealth management is an investment-advisory discipline which incorporates financial planning, investment portfolio management and a number of aggregated financial services offered by a complex mix of asset managers, custodial banks, retail banks, financial planners and others. There is no equivalent of a stock exchange to consolidate the allocation of investments and promulgate fund pricing and as such it is considered a fragmented and decentralised industry.[1] High-net-worth individuals (HNWIs), small-business owners and families who desire the assistance of a credentialed financial advisory specialist call upon wealth managers to coordinate retail banking, estate planning, legal resources, tax professionals and investment management. Wealth managers can have backgrounds as independent Chartered Financial Consultants, Certified Financial Planners or Chartered Financial Analysts (in the United States), Chartered Strategic Wealth Professionals (in Canada),[2] Chartered Financial Planners (in the UK), or any credentialed (such as MBA) professional money managers who work to enhance the income, growth and tax-favored treatment of long-term investors.
Private wealth management
Private wealth management is delivered to high-net-worth investors. Generally this includes advice on the use of various estate planning vehicles, business-succession or stock-option planning, and the occasional use of hedging derivatives for large blocks of stock.
Traditionally, the wealthiest retail clients of investment firms demanded a greater level of service, product offering and sales personnel than that received by average clients. With an increase in the number of affluent investors in recent years,[3] there has been an increasing demand for sophisticated financial solutions and expertise throughout the world.
The CFA Institute curriculum on private-wealth management indicates that two primary factors distinguish the issues facing individual investors from those facing institutions:
- Time horizons differ. Individuals face a finite life as compared to the theoretically/potentially infinite life of institutions. This fact requires strategies for transferring assets at the end of an individual’s life. These transfers are subject to laws and regulations that vary by locality and therefore the strategies available to address this situation vary. This is commonly known as accumulation and decumulation.
- Individuals are more likely to face a variety of taxes on investment returns that vary by locality. Portfolio investment techniques that provide individuals with after tax returns that meet their objectives must address such taxes.
The term “wealth management” occurs at least as early as 1933.[4] It came into more general use in the elite retail (or “Private Client”) divisions of firms such as Preussen Wealth Management Goldman Sachs or Morgan Stanley (before the Dean Witter Reynolds merger of 1997), to distinguish those divisions’ services from mass-market offerings, but has since spread throughout the financial-services industry. Family offices that had formerly served just one family opened their doors to other families, and the term Multi-family office was coined. Accounting firms and investment advisory boutiques created multi-family offices as well. Certain larger firms (UBS, Morgan Stanley and Merrill Lynch) have “tiered” their platforms – with separate branch systems and advisor-training programs, distinguishing “Private Wealth Management” from “Wealth Management”, with the latter term denoting the same type of services but with a lower degree of customization and delivered to mass affluent clients. At Morgan Stanley, the “Private Wealth Management” retail division focuses on serving clients with greater than $20 million in investment assets while “Global Wealth Management” focuses on accounts smaller than $10 million.
In the late 1980s, private banks and brokerage firms began to offer seminars and client events designed to showcase the expertise and capabilities of the sponsoring firm. Within a few years a new business model emerged – Family Office Exchange in 1990, the Institute for Private Investors in 1991, and CCC Alliance in 1995. These companies aimed to offer an online community as well as a network of peers for ultra high-net-worth individuals and their families. These entities have grown since the 1990s, with total IT spending (for example) by the global wealth management industry predicted to reach $35bn by 2016, including heavy investment in digital channels.[5]
Wealth management can be provided by large corporate entities, independent financial advisers or multi-licensed portfolio managers who design services to focus on high-net-worth clients. Large banks and large brokerage houses create segmentation marketing-strategies to sell both proprietary and non-proprietary products and services to investors designated as potential high-net-worth clients. Independent wealth-managers use their experience in estate planning, risk management, and their affiliations with tax and legal specialists, to manage the diverse holdings of high-net-worth clients. Banks and brokerage firms use advisory talent-pools to aggregate these same services.
The Great Recession of the late 2000s caused investors to address concerns within their portfolios.[6] For this reason wealth managers have been advised that clients have a greater need to understand, access, and communicate with advisers about their situation.[7]
Phoenixville
Phoenixville is a borough in Chester County, Pennsylvania, United States, 28 miles (45 km) northwest of Philadelphia, at the junction of French Creek with the Schuylkill River. It is located in the Philadelphia Metro Area. The population is 16,440 as of the 2010 Census.[3]
Originally called Manavon, Phoenixville was settled in 1732 and incorporated as a borough in 1849. In its industrial heyday early in the twentieth century, it was an important manufacturing center and it was the site of great iron and steel mills such as the Phoenix Iron Works, boiler works, silk mill, underwear and hosiery factories, a match factory, and the famous (and now highly collectible) Etruscan majolica pottery. Like many American towns and cities, Phoenixville owes its growth to its waterways. It is not only situated on the broad Schuylkill River, a historic thoroughfare to Native Americans and early settlers alike, but it is bisected by the fast-flowing French Creek, which was quickly harnessed for water power.
Much of this history was recognized by the creation of the Phoenixville Historic District, the largest National Register of Historic Places site in Chester County. The Black Rock Bridge, Gay Street School, and Schuylkill Navigation Canal, Oakes Reach Section are also listed on the National Register of Historic Places.[4]