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Meaning of Wealth
Management
 A professional service to optimize,
protect and manage wealth
 An investment advice on loans,
investment and insurance
 Also advice on tax, estate planning,
business planning and charity
foundation.
 It is an ongoing process with define
steps that involve planning, execution,
review and management.

Wealth management
 Wealth management services are
provided by
 Corporate entities
 Independent financial advisor
 Portfolio managers
 Banks
 Brokerage houses

Need for WM
 Planning
 Asset Management
 Risk Management
 Lending
 Advisory Services

Wealth Management
Process
Understanding
Opportunities
and Issues
Planning
Wealth
Management
Strategy
Supervising
and
Monitoring
Implementin
g the Wealth
Management
Plan

Wealth Management
Process
 Understanding Opportunities and Issues
 Investors know thyself
 Understanding values, goals and needs
 Developing rational investment expectation
 Planning wealth management strategy
 Impact of Taxes
 Developing an investment policy
 Importance of asset allocation
 Integrated wealth planning

Wealth Management
Process
 Implementing the wealth management
plan
 Supervising and monitoring process

Goals of WM
 Asset Management
 Asset allocation aims to optimize return by
minimizing risk.
 Achieve the goal through diversification and
customized investment strategies.
 Planning
 Advance thinking and necessary services to
formulate, manage and complete financial
requirement

Goals of WM
 Equity Risk Management
 Preserve capital against decrease in value
of stock
 Generate liquidity
 Diversify the exposure

Stages in Human Life Cycle
 Childhood Stage
 Young Unmarried Stage
 Young Married Stage
 Both Partners Working
 Single Partner Working
 Young Married with Children Stage
 Married with Older Children Stage
 Post Family and Pre Retirement Stage
 Retirement Stage

Financial Needs
 Survival Money
 Household need for food, clothing and
shelter
 Liquid instruments
 Need for emergency situation
 Safety Money
 To meet life’s unexpected turns
 To protect the assets
 To protect the person who generates the
assets

Financial Needs
 Freedom Money
 Funds to support non - basic needs
 Investment in short term instruments –
savings, treasury bills, money market fund
 Gift Money
 Charitable institution or foundation
 Education and estate for their children
 Investment in long term instruments –
bonds, mutual funds, equities

Financial Needs
 Dream Money
 Funds required to have all the things that a
person dream of being, having or doing
 Funds that will need beyond peak income
years
 Funding for medical expenses after
retirement
 Invest in long term instruments – bonds,
notes, mutual funds.

Asset Classes
Investment Classes
Equity Fixed
Income
Securities
Real
Estate
Precious
Objects
Derivatives
and
Structured
Products
Commo
dities

Asset Classes
 Equity
 Rewards associated with equities
○ Dividend
○ Capital Gains
○ Right to subscribe to new shares
○ Right to vote
○ Right to information
 Risk Associated with equity
○ Residual capital
○ Capital Loss
○ Liquidity risk

Asset Classes
 Real Estate
 Residential House
 Commercial Property
 Agricultural Property
 Suburban Land
 Real Estate Investment Trust
 Precious objects
 Gold
 Silver

Asset Classes
 Fixed Income Securities
 Issued by govt., govt. agencies, state govt.,
corporation, municipalities, banks.
 Cash flow promised to buyer represent
contractual obligations on issuer.
 Stream of payments by way of interest and
repayment of principal at maturity.
 Mutual Funds

Asset Classes
 Commodities
 Includes all kinds of goods
 Types of commodities
○ Energy
 Primary – crude oil, coal, natural gas, nuclear fuel
 Secondary – electricity, refined oil products, diesel,
petrol, LPG
 Half-products – petrochemicals, ethylene
○ Mineral ore – iron, steel, copper, zinc, gold,
silver, platinum, aluminum
○ Agricultural food products – wheat, corn, rice,
tea, coffee, apple, grapes, cotton, jute, fish

Asset Classes
 Derivatives and Structured Products
 Derivatives – derives its value from some
underlying asset like securities, currency,
commodities or stock.
 Types of derivatives
○ Exchange traded derivatives
 Future contract
○ OTC derivatives
 Forward contract

Products in WM
 Direct Equity
 Mutual Funds
 Insurance
 Structured Products
 Private Equity
 Real Estate
 Estate Planning
 Commodities

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