In recent years, a curious misalignment between investing and tax planning has emerged: discretionary hedge funds have been under scrutiny for high fund management fees and charges despite lackluster performance.
However, prior to the 2008 financial crisis, returns were good, and investors had no problem paying higher fees and incentives.
A lot has changed for the industry and wealth managers need to consider a more investor-oriented approach to wealth management. Luckily there is one key feature that has always made wealth management for high-net-worth individuals (HNWIs) special.
The Curious Misalignment of Investing and Tax Planning
Wealth management services for investors with over $1 million in investable assets have always been holistic and multi-disciplined, unlike those for investors with a lesser amount.
With the growing number of millionaires around the globe, the bar for private banking services has now been raised to $10 million and above, meaning single-digit millionaires can no longer access white glove financial services. In this case, HNWIs are those with over $10 million in investable assets.
Financial planning involves some distinct services all carried out by professionals from different backgrounds; for example financial advisors, accountants, and attorneys. While a financial advisor is responsible for assessing the investor’s financial situation and determining fitting investments, an accountant is responsible for modeling cash flow, tax planning, and reporting.
An attorney, on the other hand, takes charge of all the legal matters revolving around wealth management. Integrated investing is all about making these professionals work together under a common goal.
Wealth Management for High Net Worth Individuals
Quality wealth management requires teamwork. What appears to be a good idea in one part of planning may have negative consequences in another. According to a white paper by EY, wealth managers and clients realize significant cost savings when all the components of wealth management are aligned and integrated. The reason wealth management integration is not offered to ordinary investors is that it is expensive and time-consuming.