What is wealth management?

Wealth management can help bring together all aspects of your finances into one joined-up strategy. This can help you make informed decisions about your money now and in the future. Whether your finances have become more complex or your priorities have changed, understanding how wealth management works can help you plan with greater confidence and clarity.

While the term ‘wealth management’ is often used, it’s closely linked to financial advice and financial planning, which you may be more familiar with. But to put it simply, it’s a more comprehensive approach to advice, designed for when your finances become more complex.

Wealth management is a holistic approach of managing all aspects of your wealth, including things like:

• investment portfolios (like ISAs)
• pensions
• tax planning
• your estate

It doesn’t focus on your individual investments, instead it brings together multiple areas of financial planning, including the strategies of your investments, tax and retirement planning and risk management.

Unlike more focused financial advice, wealth management takes a step back to look at how each part of your financial life connects, helping ensure decisions in one area don’t negatively impact another. This joined-up approach can become more important as your financial situation grows in size or complexity.

You might decide that wealth management is a good idea for a few different reasons. You might have had a big life change that affects your finances, like having a baby or bought a house. Or it could be as simple as you’re approaching retirement and want to make sure all of your ducks are in a row.

You might turn to wealth management to also ensure you’re using your money as tax efficiently as you can. As your financial situation grows, you might feel it’s more important to make full use of your tax allowances, managing your Capital Gains Tax (CGT) exposure, and structure your investments in a way that supports both short and long-term goals.

If you’re currently in DIY or asset-only investment management, or traditional financial advice, this might no longer be sufficient. Wealth management can provide you with broader oversight on what’s needed to coordinate your investments, tax planning and future goals.

At this stage, more traditional financial advice may not provide the full picture. Whereas wealth management can help coordinate these moving parts into a single, long-term strategy.

Asset management, or investment management, focuses entirely on managing your investment portfolios. Its aim is to grow assets or generate income by selecting, monitoring and adjusting investments.

Wealth management, on the other hand, focuses on your entire financial situation.

Financial advice often sits between the two, offering recommendations on specific products or decisions, while wealth management brings everything together into a longer-term plan.

The two approaches serve different needs. Asset management focuses on those who are investment focused who are comfortable handling other areas of their finances themselves. Wealth management can suit a range of people, from individuals and families to business owners who may benefit from support with their wider finances.

Family wealth management focuses on planning and protecting your wealth across generations, rather than as an individual. It usually will combine investment planning with things like inheritance tax and estate planning, to help ensure your family wealth is preserved. This might be setting clear goals for how the wealth should be used to support later generations and deciding how financial decisions are made within the family.

Getting started usually looks like analysing your family’s finances as a whole and identifying how you can protect and grow any assets, pensions or investments for later. 

There are a mix of pros and cons to wealth management, so making sure you weigh up your options before going ahead can make sure you don’t waste time or money. Here are some things to consider:

Wealth management and financial advice are closely connected and might be delivered together. Where financial advice will focus on specific recommendations, such as investments, pensions or protection, whereas wealth management will take a broader view of your overall financial position.

If you decide to combine the two, you could benefit from detailed recommendations alongside a long-term strategy that can help connect all aspects of your finances.

It’s not just for people who see themselves as “wealthy”, it can be helpful whenever your finances become more complex and you want everything to work together in a clear, organised way.