History of Wealth Management and its 3 Pillars Theory

financialtreat – will explain the History of Wealth Management and its 3 Pillars Theory that you will get in the following article. Let’s look at this article carefully!

Nowadays it is very important to know what Wealth Management is. People with good wealth management knowledge will know how to achieve a healthy financial goal and a better life in the future. Especially regarding knowledge of retirement fund planning behavior. Especially for you business people, the existence of wealth management will be very helpful in managing and planning your finances.

Maybe you have heard the term wealth management or wealth management. Well, on this occasion, we will discuss the history and main pillars of wealth management which amount to three pillars. In addition, check out the following review!

History of Wealth Management

The history of Wealth Management dates back to London around the 17th and 18th centuries. The beginning of development is influence by the growing international financial center. This development occurre inseparably from private bankers who became financial reforms in the earliest form.

Financial institutions provide various services to members of the kingdom who conduct international trade. There are several functions of this financial institution, namely as a depository, lending, and providing foreign currency to carry out the exchange of goods with other countries.

The activities of private bankers became the beginning of the evolution of banking which helpe create other types of banks such as commercial banks, corporate banks, merchant bankers, and so on. Thanks to the industrial revolution, London and Paris became the center of wealth management development. Institutional wealth management began in London and is expanding to various regions of Europe, the Americas, Asia, and other continents.

The term wealth management began to be use in the 1990s among stockbroking companies, banks, and insurance companies. Wealth management is an evolutionary form of financial consulting for clients of the company. Wealth management is a more advance type of financial planning that provides input to individuals and families relate to land ownership, taxation, asset management, and portfolio management.

Tyga The Main Pillars of Wealth Management

Wealth management has three main pillars, namely Wealth Protection and Preservation, Wealth Accumulation and Growth, and Wealth 9 Distribution and Transition. The three pillars can be describe as follows:

Wealth Protection and Preservation

The first pillar of wealth management emphasizes the protection of the wealth of manage clients. This protection is carrie out on all risks that can occur and has a detrimental impact on the client’s wealth. In general, protection or protection against risk can be done through insurance.

Insurance as a form of risk control is done by transferring risk from one party to another (insurance company). Insurance has several types that can be use to manage wealth. In general, insurance products are divide into three major parts, namely life insurance, health insurance, and general insurance.

According to Law No.2 of 1992 article 1, insurance is an agreement between two or more parties, the insurer binds themselves to the insure, by receiving insurance premiums. Reimbursement is given to the insure due to loss, damage, or loss of expecte profit, or to provide a payment base on the death or life of the insure person.

Insurance is neede by a person to protect or protect himself and everything he has.

In general, insurance has two functions. The main function of insurance is a mechanism for the transfer of risk. The next function is The Joint Fund There are several contributions in the form of insurance premiums collecte in the source pool from many people to pay for the losses incurre.

In general, insurance is not the only option to protect and face the risks that arise. There are still other options that can be use in wealth protection. These options include hedging, and utilizing other financial products, such as derivative futures products (futures contracts), forwards, swaps, and options (stock option contracts).

In addition, there are still other options, namely diversifying. With appropriate diversification, the risks face by the entire wealth can be minimize. By understanding the concept of diversification relate to risk, the family that manages this wealth can determine the right asset allocation in maintaining the wealth it manages. Conceptually, diversification can be done according to the asset class or according to geography.

Wealth Growth and Accumulation

The second pillar of wealth management is pressure on wealth growth and wealth accumulation. Growth and accumulation of wealth are manage through several managements, namely tax management, investment management, business venture, and money management.

Broadly speaking, growth and accumulation can be manage from two sides of the point of view, namely tax management and investment management.

Tax management focuses on exploring the taxes that are sacrifice to the client on the income earne at all times. Taxes as obligations that must be paid. But there are still opportunities or loopholes in legal tax provisions. This opportunity can be use for payment efficiency.

Opportunities in using investment management are the determination of investment strategies that can ultimately provide profits with risks that are in accordance with client tolerance. Excellent investments are made in real assets, such as business formation, collection of valuable objects, gold storage, and real estate; or it can also be do on financial assets such as mutual funds, stock holdings, bond holdings, and other financial products.

In general, there are three important factors that investors need to pay attention to in making their investments, namely: return on expectations (expecte returns), investment horizons (investment period), and risk. There are several instruments that can be use in portfolio management on this second pillar, namely mutual funds (money markets consisting of SBI, deposits, short-term debt securities), bonds, and stocks.

Wealth Distribution and Transition

The third pillar of wealth management emphasizes wealth planning after passing the productive period. This planning includes inheritance (estate) and pension (pension). In the third pillar, this is important in planning for old age or retirement. In this case, there will be a decrease in quality of life and the risk of illness can occur in the client.

A good financial goal is a condition in which you can stay prosperous and enjoy life until old age and death call. Therefore, personal financial management suggeste by wealth management emphasizes the pillars of wealth distribution and transition. Managers not only manage your funds in order to achieve financial goals in productive times but until you have touche retirement.

Retirement planning can be do alone or through a pension fund organize by a body. Pension funds can be an employer’s pension fund, and it can be a financial institution’s pension fund. In addition to following the pension fund for retirement planning, a client can make personal savings to meet the needs of retirement planning.

Wealth management not only gives advice but also comfort in managing finances. The money and treasures you have now can be lost in an instant if not manage properly. The value can also be erode if you do not manage. Therefore, it is very important to have a careful personal financial plan to maintain the value of your property so that it can continue to grow and can meet all financial goals in the future.

The Importance of Wealth Management

There are still many parties who underestimate the way personal finance management through wealth management. In fact, the example of this method is fairly effective. Wealth management itself is the management of unlimite wealth through investments.

When you sign up for the wealth management products of a bank or company. It means that you will also get comfort in carrying out your various financial transactions. For example, you will be prioritize in each transaction so there is no need to waste a lot of time just waiting in line.

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Later when you become a wealth management customer. You will have a relationship manager who can be your advisor in giving consideration regarding the choice of financial steps. This relationship manager is a person who understands the customer’s business.

The advice given by relationship managers generally considers several aspects. Such as customer personal conditions and plans, retirement plans, assets owne, income, and taxation. So, advice from him can help you in managing funds and breeding assets.

Not only that, when you are registere as a wealth management customer. The relationship manager will also prepare your inheritance problems so that if a risk occurs. Such as death and permanent disability, your family will not have a great conflict regarding the division of inheritance.

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