Technical and Soft Skills for Wealth Managers
Technical Skills Private wealth management resembles both an art and a science. That is, a wealth manager needs to have the professional aptitude to understand the client's financial goals, objectives, and constraints, as well as the financial acumen to recommend…
Private Clients Risk Tolerance
Risk tolerance: Refers to the level of risk an individual is willing and able to assume. Risk capacity: Refers purely to the ability to accept financial risk. Risk perception: This is an attitude toward risk. Risk Tolerance Questionnaire Risk tolerance…
Client Goals based on Client Information
Planned Goals Planned goals will be those which are easiest to account for, in that clients will bring them up with their wealth management team, hopefully at the outset of a relationship. The following are some examples of planned goals:…
Tax considerations and private client investments
Common Tax Categories Taxes on income: These include taxes on salaries, interest, dividends, capital gains, and rental income. Wealth-based taxes: These include taxes on the holding of certain types of property and taxes on the transfer of wealth. Taxes on…
Information Needed in Advising Private Clients
Personal Information Several factors contribute to the success of a wealth management relationship. To provide comprehensive advice, managers require all pertinent details about the prospective client, avoiding fragmented advice based on a partial analysis of the client's wealth. Relevant personal…
Private Clients versus Institutional Clients
Private clients typically refer to individuals and families looking to invest their wealth. In contrast, institutional clients encompass companies or organizations that pool funds to achieve specific goals on behalf of owners and potentially other stakeholders. This section aims to…
Monitoring Alternative Investment Programs
Overall Investment Program Monitoring Investors enter alternative investment programs with specific goals: risk reduction, return enhancement, income, or a mix of these. These programs are long-term commitments, so it’s crucial to continuously monitor their progress. Investors must ensure that their…
Liquidity Planning
When managing portfolios with alternative investments, managing liquidity risk becomes crucial. You need enough liquidity for: Periodic payments to beneficiaries. Rebalancing the portfolio or funding new asset manager mandates. Meeting commitments to private investment funds when they call for capital….
Approaches to Asset Allocation and Statistical Characteristics and Challenges
Modeling risks and returns for alternative investments is challenging due to two key factors: Stale Valuations: Private alternative investments often rely on appraisals for valuations, which can be outdated or artificially smoothed. This leads to underestimated fundamental risks when calculating…
Suitability Considerations
Investment Horizon Private real estate investments, private real assets, and private equity investments are generally unsuitable for investors with less than a 15-year time horizon. Assuming no new investments are made after the 7-year mark, an investment can take five…
