Last Updated on 22/11/2023 by Carl-Peter Lehmann
Are you feeling overwhelmed by the multitude of financial decisions in your life? You’re far from alone. In a world brimming with financial complexities, the need for specialized guidance has never been more vital. Welcome to this informative guide, where we’ll demystify everything from private wealth management and personal wealth management to international wealth management strategies and the rise of independent wealth advisors. Get ready to navigate your path to financial security with confidence as we unpack the world of private wealth management and everything it entails.
What is Private Wealth Management?
Private wealth management is more than just investing your money; it’s a holistic approach that combines financial planning, investment management, and other personalized financial services. From retirement planning to tax optimization, the aim is to create a strategy that is as unique as you are.
In South Africa alone, there are approximately 37,000 High-Net-Worth Individuals (HNWIs), How HNW is defined differs by country or even institution – but most SA financial institutions would catergorise you that way if you have a net worth of around R15 million or more. These numbers highlight the growing need for specialized financial services tailored to a more affluent client base. But do you need R15 million to qualify for a private wealth management service? Not at all …
Private wealth management is simply an extension of a more typical holistic financial planning offering, whereby people who can invest larger amounts, have access to a broader toolkit of solutions. It’s a service designed for individuals who have accumulated a sizeable amount of wealth and therefore require strategies and investment opportunities that are tailored to reflect their more complex financial landscape.
The Landscape of Personal Wealth Management
Beyond the usual suspects like real estate and stock market investments, personal wealth management also dives into more nuanced asset classes. These can range from private equity and hedge funds to other alternative investment opportunities that might be less accessible to the average investor.
A robust risk assessment is the backbone of effective personal wealth management. Diversification is not just about spreading your investments across stocks and bonds; it’s about strategically allocating assets across a variety of classes, including the likes of private equity and hedge funds.
Once you’ve accumulated significant wealth, the focus often shifts from maximizing returns to sustainably and efficiently preserving your assets. You may have various ‘buckets’ of wealth, each serving a different purpose—be it generating income for your lifestyle, holding lifestyle assets like property, or earmarking investments for future generations or philanthropic endeavours.
Importance of a Personal Relationship With Your Private Wealth Advisor
Think of your wealth manager as your financial confidant. They should know your financial aspirations, fears, and lifestyle. A strong, transparent relationship is vital for effective wealth management. Outside of your Doctor or GP, your personal wealth manager or advisor will often know the most important and intimate details of your life, which will allow them to help you achieve the outcomes most important to you.
Why Go International? The Benefits and Risks of International Wealth Management
South Africans grapple with unique challenges, like a depreciating currency and political uncertainty, making international wealth management crucial. Just look at the rand’s performance over the last decade: On January 1, 2013, the rand-dollar exchange rate was 8.9241 ZAR/USD; today, it’s hovering around 19 ZAR/USD. That’s roughly a 50% depreciation against the USD in just 10 years. The reality? Most South Africans are under-invested in offshore assets and over-exposed to Rand-based ones. Incorporating an international wealth management strategy isn’t just advisable—it’s essential. And we’re not even talking about the potentially higher returns yet. Beyond diversification, offshore assets can be held in tax-efficient structures like offshore trusts or life wrappers, maximizing benefits while minimizing your tax liability.
The returns of different stock market benchmarks represented in USD as at 18/09/2023 – show that as a South African investor (EZA) over the last 10 years you’ve lost money. Contrasted against the S&P 500 (SPY), the Nasdaq (QQQ) and Total World Stock Index (VT), your wealth has gained appreciably. This illustrates that if you’re serious about growing and preserving your wealth – being invested internationally is a must.
The Rise of Independent Wealth Advisors
In the age of fintech, independent wealth advisors have levelled the playing field. Gone are the days when you had to rely on large firms with steep fees and potential conflicts of interest. As big institutions like Private Banks face shrinking margins and often push their own products, their impartiality is increasingly in question. Meanwhile, the democratization of financial information and products means that independent wealth advisors can offer the same range of options, but with a personalized touch. This shift not only puts you in the driver’s seat but also provides more tailored solutions for your financial journey. What matters less is the product or solution, but a tailored service proposition that can help you achieve the goals and outcomes most important to you.
How to Choose the Right Wealth Management Service
Credentials, experience, and a proven track record are just the tip of the iceberg. The right wealth manager should also fit well with your personality and financial aspirations. Before you ink any deals, make sure you ask the right questions. What is their investment philosophy? How do they charge for their services? Get all the facts upfront. Your wealth manager will be handling your hard-earned money; make sure they’re someone you can trust. Transparency in fees, performance reporting, and communication is non-negotiable.
Why Henceforward is Your Ideal Partner in Private Wealth Management: Here at Henceforward, we prioritize personalized strategies and transparent relationships. With a proven track record and a team of experienced professionals, we’re equipped to guide you on your journey to financial freedom. And we are able to start offering customised wealth management services to individuals once they have approximtately R5 million and above available to invest. That allows us to begin tailoring solutions in a more specialised manner.
Read Next: Defining Wealth and How To Achieve Lasting Wealth
Conclusion
Navigating the world of private wealth management doesn’t have to be a daunting task. Whether you’re looking for personalized financial solutions through personal wealth management, seeking to diversify with international wealth management, or considering the tailored services of independent wealth advisors, the right guidance can secure your financial future. If you’re ready to elevate your finances and live the life you’ve always envisioned, schedule a consultation with us today.
Carl-Peter Lehmann
Carl-Peter is a Director and Partner at Henceforward. He has over 20 years Private Wealth Management experience, especially working with clients with offshore and international wealth.
