What is wealth manager’s role in helping an investor grow?

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What is wealth managers role in helping an
investor grow?
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Difference between investment and wealth
managers
When it comes to managing money, we like to do it
in a wholistic way, irrespective of whether we
ask for help from a wealth or asset manager to
ride the course. While the term investment
management and wealth management might sound very
similar, do remember that both verticals are way
different. An investment manager, basically,
handles financial products, where as the wealth
managers look after personal portfolios of
finance of their clients. A bigger difference
lies between their targets of performance and the
measure.
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Further differentiation
The investment managers work in accordance to the
market indices. How they perform, depends a lot
on the class of asset that they have invested in.
It is therefore relative and usually concentrate
on making correct decisions at the right time for
securities in the clients financial portfolio,
so as to be able to make higher returns than the
set bar. One the other hand, asset management
companies in India need to give an absolute
performance in the limits of the return and risk
range that have been agreed upon by the
investors. An investors financial needs can
certainly not fluctuate with the whims of the
market indices and hence, putting more pressure
on a wealth manager than asset manager.
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Net worth maximisation
Wealth managers who take it on them to make sure
the accounts or balance sheets of the investors
are balanced, advice the investors, firstly, on
the assets that they need to build for their
respective business. The assets that we talk
about here are invested in and created because
they are able to give income in return as they
grow in value. The net worth of an individual
investor is calculated by how much the assets are
more than the liabilities. All kinds of decisions
that wealth manager take for the investors should
be with the sole goal of maximisation of net
worth in the long run.
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The next step
Moving ahead, the next step in making strategic
decisions is about considering the composition,
and mainly the quality of the investors asset
portfolio. The rate at which an asset is supposed
to grow, is the target rate. It is found by
estimating the number of uses that the asset
would be put to use in future. These are called
financial goals. Amidst the right range to make
sense of housing finances, the portfolio should
be able to reach the target return.
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Reaching target return
How does a wealth manager do that? Through
allocating assets. It could be done passively by
the use of a model allocation and even actively,
by a more strategic allocation. It is on these
grounds, that wealth management firms
differentiate themselves. However, it does not
change the core responsibility of managing a
target return. It is important to remember that
the asset portfolio does hold certain amounts of
risks.
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Thank You
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