The document discusses wealth management and provides details on: - What wealth management entails and the types of clients it serves - The different types of wealth management firms including private banks, brokerage firms, investment banks, trustee firms, and family offices - The client service models of private banking which includes relationship management, wealth planning, banking/investment products, and transaction/reporting services - How clients are segmented based on sources of wealth, value to the firm, location, sophistication, and life stage - The different client categories of affluent, private banking, and wealth management based on net worth - An overview of the key elements and process of financial planning for wealth management clients

1. Wealth
Management
Preparer: Tarun Arya

2. What is Wealth
Management
Wealth management is an investment advisory service that
combines other financial services to address the needs of
HNWI clients. Wealth management, while related to private
banking, is specifically about the holistic management of
an individual's financial life.
It is not just about investment advice or investment
management. Rather, it is about the coordination and
planning of an individual's finances and tends to take into
account the current and future needs of the individual and
his/her family.
This wealth management or financial planning service may
be provided to HNWIs or individuals/families of more
modest needs (that is, less than USD 1 million in investable
assets).

3. TYPES OF WEALTH MANAGEMENT FIRM
Private Banks: The original private banks of Europe were small partnerships that managed the personal wealth and banking needs of a network of client families.
Brokerage Firms: Brokers seek to service the wealth needs of their HNWI clients directly in much the same manner as investment banks, but with an obvious focus on their own
offerings – for example, sourcing and offering IPOs as well as their usual stock/bond trading services.
Investment Banks: Investment and merchant banks that traditionally were only involved in wholesale and institutional banking relationships have in recent decades looked upon the
HNWI demographic as a willing (and able) potential market for their wholesale and sophisticated wealth offerings.
These banks often have dedicated sales staff that talk directly to HNWI clients, while in some cases they may partner with traditional private banks as a third-party provider or
"manufacturer" of private wealth offerings.
Trustee Firms: Trustee firms are specialist financial services firms that – in the private wealth management sense – manage assets and property or act in a position of trust or
responsibility for the benefit of their HNWI clients.
Family Offices: Family offices are a type of privately-owned and managed company whose role – if a single-family office – is to manage the wealth, assets, and trusts of its sole family
client.
The family office may be independent of the client, but more often than not it tends to be "in-house" or owned by the client as a type of management department of the family as a
whole. A multi-family office performs the same tasks as a single-family office,but has more than one client family.
Family offices often form relationships with a variety of private banks and other institutions.

4. Client Service Models of Private banking
Private banking is integral part of wealth management. Private banking, but it is generally said to be the provision of transaction
banking, investment services, credit and lending facilities, and other allied financial services by banks and trustee companies to high-
net-worth individuals (or HNWIs) and families. private banking aimed to provide an integrated service that encompassed four key client
propositions. Private banking practice forms an elite, high-touch, and more exclusive subset of wealth management.
1.Relationship & Distribution management
This Aim for retention of clients and acquiring new clients through better relationship management of current clients.Better services
require skilled team which is efficient in needs analysis, and proper matching od needs with appropriate available or bespoke products.
2. Wealth Management & Planning
This involves the wealth management component of a client relationship and a private bank's capability suite. It includes, but is not
restricted to:
• Investment portfolio planning
• Holistic financial planning
• Tax advice
• Retirement planning
• Estate planning, trust services, and philanthropy services
• Discretionary asset management support

5. Client Service Models of Private banking
3.Banking and Bespoke investments products
In addition to basic bank accounts, exclusive credit card facilities, and lending facilities, private banks are in a position to provide trading and best
in class investment opportunities in below instruments with detailed calculation and analysis of need and matching of present and future
requirement of clients.
• Money market accounts
• Foreign exchange
• Stocks and other securities
• Derivatives
• Pooled investments such as mutual funds and ETFs
• Structured products and other alternative investments
• Insurance
All of these products can be tailored to the requirements of the client in terms of amount and cost/price. The pricing element is usually finer than
that available to retail or premium clients and tends to mirror the competitively low rates charged to major firms and institutions.
4. Transaction and reporting services:
In addition to all above services private banks provide other services such as Fund Transfer, Clearing & settlements, Brokerage and reporting
services as well.

6. Client Segmentation
In order to better Handle the diverse client base ,Private bank and Wealth management firms Have sought to subdivide their clients into
specialist grouping .This process called Client Segmentation is a superior method of capturing those common aspects of group of clients whose
needs can then be more effectively served by wealth managers.
The Segmentation of clients traditionally has been along the lines of:
• Sources of wealth
• The value and revenue that they bring to the wealth management business.
• Geographic location
• The level of financial sophistication
• Stage of life- Based of where client is in their financial life path
• Other specialist criteria from time to time
The correctly done segmentation can bring benefits to the client and wealth management businesses.
Done incorrectly , segmentation can alienate the client.

7. Client Categories
Affluent: Investable assets USD 100,000 to USD 1,000,000.It consist of a broader range of investment
products then those offered to retail clients. A relationship manager for the affluent usually takes care for the
100 of client so the relationship here is of reverse enquiry basis and of mass offering and selling.
Private banking: This is provided to the clients having investable assets more them 1 million dollars. In this
the bank aims at providing sophisticated solutions for investment to the clients and taking care of their finances.
In this category the relationship manager takes care of 75 to 100 clients with mare personal connect with clients.
Wealth Management: Offered to client who have more them 20 million USD investable assets. WM clients
have direct access to the Financial experts. Such as Investment advisors, FX Traders, Credit Specialist and wealth
planners. They are benefitted with the in-house family office services as well. A relationship manager in this
category takes care for 255 clients. The client relation is more institutional and more transaction based in style.

8. Client
Classification
and their Net
Worth
Affluent individuals
Individuals who
have net worth less
than $1 million but
more than
$100,000.
High-net-worth
individuals (HNWIs)
Individuals who
have net worth: $1
million to $5
million.
Very-high-net-
worth individuals
(VHNWIs)
Individuals who
have net worth: $5
million – $30
million)
Ultra-high-net-
worth individuals
(UHNWIs)
Individuals who
have net worth:
$30 million or
more)

9. Wealth Management-Financial Planning
Financial planning :
To build wealth a solid financial panning is essential. Financial planning is a specialist wealth management activity where a trained and accredited finance professional
prepares financial plans to meet a client's financial needs. These plans often cover (in full or part) the following needs:
• Cash flow, debt, lifestyle, and liability management
• Planning for retirement
• Portfolio investment planning
• Management of financial risk
• Assurance and insurance planning
• Tax structuring and planning
• Estate and wealth transfer planning
• Business succession planning
Ideally, the scope of any financial plan should cover all areas mentioned, but clients may choose to limit the scope to specific themes or concerns. Even the most self-directed
client will, at some point, need support or seek to delegate some aspect of his/her financial affairs.

10. Key Elements of Financial Planning
The financial planning for HNW Clients is shown in below graphic.
For many HNW clients, the wealth creation stage may not be as important as the protection and transfer management aspects. This is because HNW clients are usually
already wealthy (by definition) and are likely to be confident in their ability to produce wealth themselves. Nonetheless, the HNW client will have goals, aspirations, and other
concerns which may require a structured financial plan.

11. Financial Planning Process
Know the client :
For a wealth relationship to succeed, it is important to establish and scope out the client's expectations of personal financial planning. This is to
ensure there is respect for the process and a willingness both to accept advice and earn trust.
Get The relevant Data:
All financial planning involves fact-finding and the gathering of client data. Much of this data is intensely personal and should be respected. The data
also confirms the client's goals and other aspirations.
Analyse the client’s financial position:
Using client data, a technical evaluation of the client's financial position will drive the process toward achieving the client's stated goals. This will also
give the financial planner the opportunity to discuss with the client whether some of his/her goals are realistic.
Develop and present the financial plan:
The real art of financial planning is the development and presentation of the final plan to the client. This plan should convincingly set out to achieve
the client's goals while addressing his/her concerns and aspirations. The initial presentation of the plan may not be its final agreed form. Often there is
an iterative process of presentations followed by client feedback. This feedback reveals more facts and nuances that may not have been picked up in
the early fact-finding sessions. The process continues until a final plan is accepted by the client.
Implementation:
The implementation of the financial plan agreed by the client often requires the client's active cooperation of plan timelines in order to ensure
success. This demands highly-attuned relationships and patience in order to win and retain the client's loyalty.
Monitor and maintain the relationship with client:
In this phase it is necessary to track the performance of the financial plan and make corrective actions as per the current circumstances arising due to
client net worth increase, inheritance, market condition & economic impacts. Regular checking and corrective actions are necessary for building long
term client relationship and get more business.

12. Wealth Management Plan development
Below is the illustrated case(All Client names are fictional ) for development of the wealth management plan:
• Client Profile: and Mr. A's wife are a married couple in their early 50s with a combined net worth of $10 million. Mr. A's wife is a successful
business owner, while Mr. A's wife is a doctor. They have two children who are currently attending college, and they own a primary residence worth
$2 million and a vacation home worth $1 million.
• Goals: Mr. A and Mr. A's wife want to retire comfortably in 10 years and maintain their current lifestyle. They also want to provide for their
children's education and leave a legacy for future generations.
• Current Situation: Mr. A and Mr. A's wife have several investment accounts, including a taxable brokerage account, a Roth IRA, and a 401(k) plan.
They also have several rental properties that generate rental income. Their current investment strategy is focused on growth, with a mix of
individual stocks, mutual funds, and exchange-traded funds (ETFs). They have a financial advisor who manages their investments, but they feel
that they are not getting enough personalized attention and are concerned about the fees they are paying.

13. Wealth Management Plan:
1. Retirement Planning:
To create a retirement income plan, the wealth management team at XYZ Wealth Management analyzes Mr. A and Mr. A's wife's current
retirement accounts and projected retirement income needs.
Current Retirement Account:
Mr. A's 401(k): $3 million
Mr. A's wife's Roth IRA: $1 million
Taxable Brokerage Account: $2 million
Projected Retirement Income Needs:
 Annual living expenses: $250,000
 Social Security: $30,000 per year for Mr. A and $20,000 per year for Mr. A's wife
 No pension income
Based on the above information, the wealth management team projects Mr. A and Mr. A's wife's retirement income needs to be
$300,000 per year. However, their current retirement accounts and Social Security income only provide $100,000 per year, leaving a
$200,000 per year gap.(Life expectancy 80 years)
To close this gap, the wealth management team recommends that Mr. A and Mr. A's wife do the following:
 Increase their 401(k) contributions: Mr. A and Mr. A's wife should increase their contributions to their 401(k) plans to the maximum
allowable limit of $19,500 per year each, which will increase their retirement savings and reduce their taxable income.
 Invest in Income-Generating Assets: To generate additional retirement income, the wealth management team recommends that Mr.
A and Mr. A's wife invest in income-generating assets such as bonds and dividend-paying stocks. They recommend allocating 30% of
Mr. A and Mr. A's wife’s portfolio to bonds and 20% to dividend-paying stocks.

14. Expected Income from the portfolio
 Bonds: $300,000 x 30% = $90,000
 Dividend-Paying Stocks: $300,000 x 20% = $60,000
 Total Expected Annual Income: $90,000 + $60,000 = $150,000
Expected Retirement Income
 Current Retirement Accounts and Social Security: $100,000
 Expected Income from Portfolio: $150,000
 Total Expected Retirement Income: $250,000
2. Tax Planning:
Tax Saving Strategies:
 Tax-Loss Harvesting: The wealth management team recommends selling securities that have declined in
value to offset capital gains and reduce tax liability.
 Charitable Giving: The wealth management team recommends that Mr. A and Mr. A's wife donate
appreciated securities to charitable organizations to reduce their tax liability.
Potential Tax Saving:
 Tax-Loss Harvesting: $20,000
 Charitable Giving: $30,000
 Total Potential Tax Savings: $50,000

15. 3. Estate Planning:
The wealth management team reviews Mr. A and Mr. A's wife's estate plan to ensure their assets are
protected and their estate is distributed according to their wishes. They recommend a life insurance
policy that would pay the estate taxes upon their passing and ensure that their children receive an
inheritance. Additionally, they suggest creating a revocable trust to help Mr. A and Mr. A's wife avoid
probate court.
4.Investment strategy:
:The wealth management team develops a customized investment strategy for Mr. A and Mr. A's wife that
takes into account their risk tolerance, goals, and time horizon. The team recommends a more diversified
portfolio that includes both active and passive investments, such as mutual funds and ETFs. They also
recommend incorporating alternative investments, such as private equity and real estate, to enhance
returns and reduce risk.
5. Fee Analysis:
The wealth management team conducts a fee analysis of Mr. A and Mr. A's wife's investment accounts
and identifies any unnecessary fees. They recommend a fee structure that is more transparent and
aligned with Mr. A and Mr. A's wife's interests.
Results: After implementing the wealth management plan, Mr. A and Mr. A's wife are able to retire
comfortably in 10 years and maintain their current lifestyle. Their investments generate a reliable
income stream that covers their living expenses, and they have a diversified portfolio that balances
growth and income. They are also able to provide for their children's education and leave a legacy for
future generations. Mr. A and Mr. A's wife feel more confident about their financial future and appreciate
the personalized attention and transparent fee structure provided by their wealth management team.