PAM Guide to Wealth Management

Advantages of wealth management

Using wealth management enables you to evaluate where you are now, where you want to get to financially in the future and how you can achieve your goals. The strategy of how to achieve these goals is constructed through collecting the relevant information, setting life objectives (such as paying school fees, buying an overseas property or having sufficient income in retirement) and then how they can be achieved with your current level of income, expenditure and the amount of investment risk you are prepared to take, perhaps also including any ethical considerations you want to include. Effectively, it is about drawing up a complete balance sheet of all your financial affairs.

Indeed, a core benefit of wealth management is that it can provide you with a strategy for your financial affairs. It highlights how each decision can affect another area of your finances and how they affect the possibility of you meeting your lifetime goals. For example, an investment may potentially impact on your tax liabilities. As major events occur in life, such as getting married, having children, getting divorced, or being promoted, so having a balance sheet of your financial affairs enables you to cope better with life's ups and downs.

For a successful relationship, you have to trust your advisers and there has to be chemistry and understanding between you. For a private wealth adviser to be able to help you manage your personal affairs, you need to provide many personal details. These not only include information about your wealth, but also details about your family and, for example, even the state of your marriage.

There are numerous examples, however, of how people do not receive such comprehensive wealth management advice, but instead are sold products by what are effectively just salesmen. This is why we refer to 'should' so often in this chapter. Just because individuals, or institutions, are called wealth managers does not mean they can or will provide you with comprehensive financial planning. Products, such as pensions and funds, should be tools to aid the achievement of your financial goals, rather than the objective in themselves.

This guide is designed to take you through the wealth management process and the sort of financial planning offered by wealth managers. We hope that reading this guide will assist you in evaluating and selecting the right private wealth advisers for your needs and in knowing the questions to ask them. The different types of private wealth advisers, who are covered in chapter two, include private banks, independent financial advisers (IFAs), discretionary investment managers, stockbrokers, family offices, lawyers, accountants and trust companies.

You can choose to manage your own financial affairs, but this may not be ideal for a number of reasons. The co-ordination of all your financial affairs requires time, knowledge and resources. This is without considering the fact that areas such as tax and succession planning can be highly complex and change regularly. As it becomes more common for children and grandchildren to move overseas and for people to buy property abroad, so the financial and tax planning required becomes even more complicated. Not only do you need to know the tax implications in the UK of owning a property in France, for instance, but you also have to be aware of the local taxes in France and how these may be mitigated. As well as capital gains and income taxes, these could include local inheritance and wealth taxes. Such a situation would typically require the services of a private client lawyer.

Gaining greater knowledge about financial planning and how the financial services industry works should enable you to find a suitable private wealth adviser to meet your lifetime needs. We hope this guide will help you achieve this.

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The PAM Directory is a comprehensive guide on comparative data focusing on asset managers, investment managers, private banks, stockbrokers, wealth managers and multi-family offices, who provide discretionary and/or advisory portfolio management services for private clients.

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