

    Private Wealth Management – why do investors use the services of a wealth manager?

    Private wealth management is an investment advisory practice that incorporates financial planning, portfolio management and other holistic financial services for individuals, as opposed to corporations, trusts, funds or other institutional investors.[1]

    In a sense, private wealth management works with individuals from low-income earners looking to fund their retirement, through to high net worth individuals looking for advice or management of their portfolios and investment strategies.

    [1] https://www.investopedia.com/ask/answers/052915/what-private-wealth-management.asp



    Why do people use private wealth managers?

    Similar to why people employ most service providers both in the professional services sector and otherwise, individuals use private wealth managers as they don’t have the time, effort or knowledge to manage the process themselves.

    Take for example a corporate executive that has a high-stress job and large workload, as well as personal & family commitments, they would simply not have the time to attend effectively to their finances in the same way a private wealth management professional would.


    Similarly, a husband and wife team that work in and manage a small business and a family, time poor and has irregular cash flow, a private wealth management specialist can work with them to ensure that factors such as their superannuation and additional investments are rolled up into a comprehensive personal financial plan that also intertwines with that of their business.

    Where financial planners in the past were well known for pushing insurance and superannuation products to enjoy their trailing commissions for the life of the client, a wealth manager looks at a holistic view of how to use all the financial instruments within their reach. These managers look outside their networks of specific advisors to get the most beneficial outcome for their clients, while also enjoying the growth themselves.

    Who are the private Wealth Management firms?

    Primarily, private wealth management firms are smaller subsidiaries within larger financial institutions that are designed to provide a personal or boutique service to their clients.

    While in the US, private wealth management tends to be for HNWI or high net worth individuals, thanks to the structure of the Australian financial services sector as well as the compulsory superannuation, the Reserve Bank of Australia define wealth management “to include various forms of funds management (superannuation, managed funds and life insurance) and financial advisory services”[1].

    As such, the firms that participate in the space are varied and are the subsidiaries inside the large banks, which post the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry are looking to either divest or spin-off.

    In addition, there are the superannuation groups, investment banks and small operators that manage small, medium and large net worth clients and their investment needs. 

    Private wealth management is geared to support private individuals who manage their capital in a more effective, measured and strategic way. They are not instruments for the wealthy to become more wealthy but offer a wide range of services that all people from all walks of life can benefit from should they take a step into the private wealth management service office.

    [1] https://www.rba.gov.au/publications/bulletin/2016/sep/pdf/rba-bulletin-2016-09-banks-wealth-management-activities-in-australia.pdf



    Want to read more great information on Wealth Management Check out our Wealth Management article: What is Wealth Management and how did the Royal Commission change the sector?