Personal wealth management is an investment consulting practice that combines financial planning, portfolio management, and other combined financial services for individuals, as opposed to corporations, trusts, funds, or other institutional investors.
From the client’s perspective, personal wealth management is the practice of solving or improving their financial situation and achieving their short, medium and long term financial goals with the help of a financial advisor.
Completely Peel Personal Management and Its Benefits!
From a financial advisor’s perspective, personal wealth management is the practice of providing clients with various financial products and services, so that those clients can achieve certain financial goals.
What is Personal Wealth Management?
Personal wealth management is especially useful for high-income individuals. Several types of institutions, from large banks to small family offices, provide personal wealth management. Personal wealth managers generally charge a small fee based on the assets under management.
Understanding Personal Wealth Management
Some individuals may lack the time, energy, or knowledge to manage their own finances. So they seek advice from wealth managers who specialize in managing personal finances, often high net-worth-individuals (HNWIs).
HNWIs have a unique financial situation that requires greater diligence and a higher level of active management. HNWI requires a more holistic approach to investment management than many financial advisors can afford.
HNWIs can have problems with income tax, estate planning, investment management, and other legal issues that require more attention and specialized expertise than traditional investment advisors can provide.
Types of Personal Wealth Manager
Personal wealth management services may be provided by major banks and brokerage houses, independent financial advisors, or multi-licensed portfolio managers focused on high-income individuals, and family offices.
Many private wealth management companies are smaller groups within larger financial institutions that are focused on providing personalized services to their clients.
Their main goal is to manage and grow their client assets to make available to future generations. The group often has a wide range of advisors and expertise providing guidance across a wide spectrum of investments including cash, fixed income, equity and alternative investing.
They can create asset portfolios that meet investors’ risk tolerance while offering growth opportunities. Some HNWIs may want to consider opening a family office.
Family offices provide more services tailored to meet the needs of HNWIs. From investment management to providing charitable advice, family offices offer total financial solutions for high net worth individuals.
There are two types of family offices: Single-family offices support a single individual or wealthy family, while the more common multifamily office supports multiple families and individuals. Multifamily offices are more prevalent because of economies of scale that allow cost sharing among customers.
How Private Wealth Management Works
Most private wealth management companies are fee based. They charge their clients a percentage of the assets under management. HNWIs may believe that fee-based financial advisors have fewer conflicts of interest than traditional commission-based advisors.
Commissioned advisors can push investors into front-end and back-end load mutual funds that charge significant commissions, in most cases without offering better performance than no-load funds.
Advances in technology have allowed many of the larger financial advisory firms to provide online services at lower costs. Although many investors are attracted to this type of service, many HNWIs still want a more personalized approach to their finances, even with the additional costs associated with it.
The Importance of Personal Wealth Management
Professor of Economics at Gajah Mada University, Eduardus Tandelilin, in his book Portfolio and Investment Theory and Application (2010), explains that wealth management is a broad and comprehensive wealth management service.
These services include, investment strategy and management, asset management, portfolio management, tax consulting, and insurance. In Indonesia, the involvement of wealth management in managing personal or family wealth is becoming a trend.
At least, there are four advantages to involving wealth management in financial management. Here Kompas.com summarizes from various sources.
Rescue in an emergency
Wealth management is becoming increasingly relevant to rely on, given the current state of uncertainty. For example, the Covid-19 pandemic. Not a few people experience financial losses at this time, both due to medical expenses and loss of family support.
Basically, wealth management works by involving relationship managers or professional wealth advisors. Their job is to make financial strategies and create a diversified portfolio of investments.
By having a complete picture of one’s financial condition, one is expected to be able to avoid unexpecte economic impacts, either due to the pandemic or other situations. For example, when there is political upheaval, social unrest, or natural disaster.
In fact, when the customer experiences a divorce or dies in the future, the distribution of inheritance has been arrange in such a way by the relationship manager. In this way, conflicts between family members can be avoide.
Minimize taxes
Rich people are synonymous with high taxes. This levy is often burdensome for them because it can interfere with the preservation of wealth. On the other hand, an effective wealth management approach is not only able to increase the value of investments, but also focuses on preparing the investment structure.
Including the management and reduction of tax collections. Even so, that does not mean the rich are completely exempt from taxes. The reduction in levies occurs because they lend assets to help pay for investment issuers’ expenses.
Optimizing time
Investment management is often a very time-consuming activity. Because, apart from investing, investors are also require to understand market trends, read financial reports, and analyze economic data.
Meanwhile, not all investors have time for these things, so the presence of an investment manager (MI) is neede. As mentione earlier, wealth management is also in charge of managing its customers’ investments.
The MI provide in the service will adjust and rebalance the portfolio according to the investment climate. That way, customers can optimize their time to do other activities.
More fluent in finance
In the midst of investment trends and increasing financial literacy, many financial terms and products have emerge. Call it, crypto assets, algorithmic trading, tokenize digital assets. The presence of a wealth manager will introduce and help customers understand the intricacies of financial instruments.
Wealth management services are generally found in the banking industry. For example, Bank BTPN through Sinaya Prioritas. This service, which has existe since 2020, is aime at prime affluent segment customers with a total portfolio of over Rp 500 million.
View Priority Sinaya Photos Priority Sinaya was initially only available in offline service. However, the wealth support system is now available online in the Jenius application. This integration makes it easier for customers to manage their wealth.
There are a number of benefits that you will get when you become a Sinaya Prioritas customer. First, priority and privilege access. Saving, investing, transacting, and monitoring Total Wealth according to your preferences can be done through the Jenius application.
In addition, Sinaya Prioritas customers also have the opportunity to receive other benefits, such as Welcome Gifts and Birthday Appreciation Gifts. There are also various other special benefit programs that can be accesse through the Sinaya Gift application.
Second, get a dedicate wealth advisor. This means that users can contact the relationship manager personally when they need service-relate information, including information on special offers.
Third, obtain special access and assistance to relationship managers when they come to the Sinaya branch office. That way, transactions can be done quickly and conveniently. In fact, users are allowe to use meeting rooms and safe deposit boxes as long as availability lasts.
Read more financial management:
- The Importance of Financial Certification! Want to Know the Reason?
- How to Manage Business or Company Finances You Should Know
Not only that, Bank BTPN also provides other privileges for Sinaya Prioritas customers. For example, free 50 times rupiah cash withdrawals at domestic or foreign automatic teller machines (ATMs) applies to withdrawals in rupiah currency accounts.
Opportunities with a similar nominal value also apply to interbank transfers, either through domestic ATMs or the Jenius application. Users can see the monthly bonus quota obtaine on the Awards menu directly through the application.
By looking at these benefits and advantages, there is nothing wrong with considering Sinaya Prioritas as your wealth management solution. For Jenius users who have a balance above IDR 500 million and want to become a Sinaya Prioritas customer.
Find offers for upgrades through the Jenius app. You can also choose to upgrade by contacting your relationship manager or coming directly to a Bank BTPN Sinaya branch.
How? Are you already intereste in personal wealth management? Good luck!