The ‘wealth’ in wealth management has ensured that wealth management and its associated services are associated with the wealthy. As such, it has been defined as a consultative process oriented toward meeting the wants and the needs of rich or affluent clients by providing them with financial services and products attuned to their needs. The delivery of such services requires the coordinated efforts of teams of experts suited to meet the individual’s needs. Such teams might encompass experts such as estate planners, tax professionals, investment managers, retail bankers, and law experts, among others. The definition above applies to about 3% of the American populace, which locks out a vast majority from accessing such services because they do not meet the wealth level ascribed to such services.
Wealth management going by the above definition means that such products are a preserve of high-net-worth individuals only. This begs the question, do people without vast assets and financial resources not require services that help them manage and possibly grow the ‘wealth’? The answer is they do need such services now more than ever as people have a desire and are more motivated to grow financially and break the generational cycle of being average. This calls for a new definition of wealth management that is all-inclusive, as has been suggested by Forbes. Inclusive wealth management entails the utilization of services, products, and processes to help individuals utilize, grow, and protect their wealth.
Unfortunately, the provision of comprehensive and competent wealth management services and products continue to be elusive to those in the moderate and low wealth brackets because they cannot afford such services. If you are in the low-income bracket paying to get the services of a team of financial experts or a single manager certified to offer wealth management services might be a costly venture, but this does not mean that financial service providers should not attend this clientele. This group, more than any other, requires some degree of literacy and advice regarding wealth management even if it is not to a sophisticated level, as is the case with that of high-net-worth clients.
Wealth management across incomes
Wealth management can be offered to all by customizing such services to the client’s needs. While high-net-worth individuals might require sophisticated products and services, advisory services for low- and middle-income clients might suffice.
The first step in wealth management is to formulate a plan that begins by identifying where the client is financially. The wealth manager must then advise the client on what they must do or not do to maintain their wealth level as a negative deviation could adversely affect their future goal. The plan must also stipulate the financial goals of the clients. A client in the low-income bracket might have a vision of investing, and wealth managers could advise them on safe investment options they could invest money such as treasury securities that are low-risk investments.
The second step is to chart a course on actions required to meet the stipulated goals. This begins by engaging in a probe of finances to identify opportunities for growth. Opportunities could take various forms, such as potential sources of savings, assets, and other resources that could be leveraged to earn additional revenue streams and potential investment opportunities compatible with the individual. Clients can do this on their own by probing the budgets and bank statements to track their spending and understand whether they are making prudent use of financial resources.
The third step is to periodically review progress toward the goals for a review of the goals if they have been accomplished or whether they need to engage in corrective action if there is a deviation. The result of helping all income brackets achieve their financial goals is that individuals grow financially, increasing their ability to access more sophisticated wealth management services, which increases the bottom line of financial services and products providers.