Question

Wealth Managers may come from banks, insurance companies, or independent financial advisory (IFA) firms.

Describe the similarities and differences between these roles.

Also compare the pros and cons, from a customer’s point of view, of choosing managers from these firms.

(400-500 words)

Answer 1

Ans ) Wealth managers are the financial advisors who through the knowledge of the field of financial dicipline help clients to amanage their wealth and increase their financial positions  through recommending tailor made advice. They have wide knowledge of fiels like law , regulations , economics ,Taxation and Real estate. Wealth management not only serve the elite wealthy people but are very much involved in the financial advisory of middle income group people they give information about the pension fund and updates their clients abount the various retirement schemes inorder to cater to the needs and wants of their clients. The core of the wealth management is , managing the wealth of the rich people or the higher income groups like CEO and chairmans of a company or managing the wealth of the politicians and other key elite class of the society. Weath management is a multidimentional field it is used by banks , insurance companies and also by private firms under the independent financial advisory. As we know the scope of work of banks primarily is related to advancing and depositing apart from the investment banking funstins such as underwriting , advising about mergers and acquisition ,and wealth management.The insurance sector is based on the risk diversifying or spreading of the risk concept as they cover their clients life insurance , business and various kinds of risks. Wealth managers in banks perform the same function as risk advisors in the insurance comapany, as they have an aim to safegurds the assets which can be the financial or physical assets of the client. Risk mitigation is the strategy adopted by the both sector wealth managers and the independent risk advisors also perform the the task to safegaurd the client from unforseen losses and reduction in wealth through the certain unexpected events or risk. The wealth managers in a bank have to use the same analytical tools and models of finance as the risk advisors or weath managers of the insurance companies . Similarly the same financial analysis and models of finance are adopted by the independent financial advisory firms .The professional knowledge and code of conduct are to be followed by the wealth managers arcoss all the fields like banks and insurance as well as private firms . The main difference rises in the quantum of applications as the banks serve a vast field and covers a lot of financial products which are far more than the insurance firms as the insurance firms main scope of work is related to the risk cover plans and they do not provide in general the functions of increasing the value of wealth as in the case of banks . Similarly the scope of operations of private investment advisory firms are not big as of the banks. Also due to the large teams an investments bank can serve a large cliental base as compare to the prive advisory firms. The benifits that can be taken by the customers are as follows for the banks the client can take the advantage of huge professional team of experts with robust indepth analysis .The client can have multiple financial products to fullfill his objective of increasing its wealth but the drawback of this is it can be a time consuming activity as one need to spare a lot of time in the conversation with the advisors team also it can take a lot of time in deciding whether to invest in a perticular assets or not . The insurance manager will give perfect risk related information and can reduce the chances of losses but at times there can be a change in premium or can be a policy change that can affect the customers. Private advisory firms helps in quick service and convineant approach but they have limited scope of operations than the banks.