Dollars and Sense

Wealth Management: The New Paradigm

Wealth management is the new paradigm. If you haven’t heard it already, you soon will hear use of the words “wealth management” by nearly everyone in the financial-services industry. It’s the latest “me, too” phrase to hit financial marketing, but what does it mean?

There are probably as many definitions for “wealth management” as you can define services provided by “wealth managers.” The Family Wealth Alliance defines wealth management as the provision of no less than 10 specific services, such as financial planning, portfolio management, tax planning, strategic philanthropy, risk management, estate and wealth transfer, trustee services, family consulting and education and consolidated reporting. Some firms refer to wealth management as a means of taking care of the needs of affluent clients, their families and their businesses as part of a long-term, consultative relationship. Finally, it has been described as a platform on which a number of different products and services are provided in a coordinated approach in the best interests of a client.

What does wealth management in any or all of its definitions mean to you and your family. Wealth management’s highest contribution and merit may simply be defined that it finally got people to look at their overall situation, as opposed to independent silos of financial behavior.

That is, instead of having a banker, a broker and an insurance agent each tell you the advantages of their loan, investment or insurance policy, and doing three different things with your money, you work with one individual, team or office of people that knows you intimately and can, through its strategic alliances, address all your needs at any given point in your life.

For instance, there may be times when a loan, either short term or long term, is your best option for your lifestyle, household or business interest. However, at another time, maybe even at better rates, your wealth-management advisor or advisory team may let you know that such a loan may not be advantageous, based on your goals and objectives.

Wealth management is not an end, it’s just the beginning. It’s an evolution of your financial situation, much of which has yet to be determined. With each change in the financial-services industry, the words we use may change, but the principles of sound advice will not.

Scott Butera is a Financial Consultant with the Honolulu office of Smith Barney and may be reached at 543-0316 or scott.m.butera@smithbarney.com. Smith Barney is a division and service mark of Citigroup Global Markets Inc. Member SIPC.

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