Wk1 Flashcards
What is wealth management?
A financial service that provides tailored investment advice, financial planning, and other financial services to high-net-worth individuals or families to help manage and grow their wealth.
What is a private bank? And how is it different to the counterfactual?
A bank that offers personalized financial services and products to wealthy individuals, focusing on wealth management and private banking services. It differs from a retail bank, which serves the general public with standardized services.
What is a family office?
A private organization that manages the wealth, investments, and financial affairs of a wealthy family, often providing services like estate planning, tax management, and philanthropy.
Understanding the landscape - what are institutional investors, what are corporate clients and how do they differ from wealthy individuals or families ?
Institutional investors are large organizations like pension funds or insurance companies that invest on behalf of their members. Corporate clients are businesses seeking financial services. Wealthy individuals or families focus on personal wealth management, distinct from the broader, often impersonal investment needs of institutions and corporations.
Understanding the detail - what is a hedge fund, how does this differ from an institutional investor or family office ?
A hedge fund is an investment fund that uses advanced strategies to generate high returns, often for wealthy individuals or institutions. It differs from an institutional investor, which manages investments for large entities like pension funds, and from a family office, which focuses on managing a single family’s wealth.
What is the difference between Advisory mandates versus discretionary mandates? And what is the difference between on-shore and offshore?
In advisory mandates, the client receives advice but retains control over investment decisions. In discretionary mandates, the financial advisor or manager has the authority to make investment decisions on the client’s behalf. “Onshore” refers to financial activities conducted within a client’s home country, subject to local regulations. “Offshore” involves financial services or accounts located in foreign jurisdictions, often for tax advantages or privacy.
How much wealth is required to be considered a HNW vs UHNW client? How does liquidity impact classification and who are the clients in this space?
HNW individuals typically have investable assets exceeding US$1 million, while UHNW individuals have more than US$30 million. UHNW clients often require more complex and personalised financial services due to their substantial wealth. Liquidity, or how easily assets can be converted to cash, can influence whether someone is classified as HNW or UHNW. Highly liquid assets may elevate an individual’s classification, while illiquid assets might limit their access to certain financial services. Clients in wealth management often include successful entrepreneurs, business owners, and inherited wealth. As wealth is typically preserved for future generations, the client base can change over time, with children or heirs becoming new clients as wealth is transferred.
What is an investment bank and are they all the same/similar?
An investment bank is a financial institution that provides a range of services including underwriting, facilitating mergers and acquisitions, trading of securities, and advisory services for companies and governments. No, investment banks vary in size, scope, and specialisation. Some focus on specific industries or regions, while others offer a broad range of services globally.
What are the types of customers of investment banking ? Are they they same as wealth management and / or private banking ? Why Pay for These Services?
Customers of investment banking include large corporations, governments, institutional investors, and sometimes high-net-worth individuals. These clients differ from those in wealth management and private banking, which primarily serve individuals and families focused on personal wealth. Clients pay for investment banking services to access expertise in capital markets, strategic financial advice, and assistance with complex financial transactions that they cannot perform in-house.
What are the potential synergies for investment banking from
global wealth management and private banking ?
Investment banking can benefit from synergies with global wealth management and private banking by cross-selling services, leveraging relationships with wealthy individuals for corporate deals, and providing comprehensive financial solutions that integrate personal and corporate finance needs.
Does the Asian private wealth market look like it is following the paths of other international markets ? Does it resemble the US in the 1980s, or Europe in the early 2000s?
US 1980’s: recovering from 1970’s stagflation leading to high growth rates, less regulations = more freedom for institutions, more innovation, wealth creation rising entrepreneurship, technology, corp takeovers
EU early 2000’s: introduced euro 1999, greater integration into the eu union, new regulation, market expansion with emerging markets
Asian markets: high growth like US did as a result of industrialisation, urbanisation, technology advancing, lots of new wealth creation from startups, entrepreneurship, family businesses of wealth. Similar to europe they are starting to have more regulations in place (increased transparency, alignment to others), more financial product innovation like both areas but more tailored to to asian needs and demographic preferences, more integrated w global system like EU did with introducing the euro
What are the key drivers of wealth and how have regional drivers of wealth changed over the last decade?
Economic growth, asset prices, wealth allocation and demographic factors.
Technology Innovation and Growth
Economic Modernization and Market Reforms
Strong Financial Markets and Investment
Entrepreneurship and Growing Middle Class
Natural Resource Exploitation
Urbanization and Industrial Shifts
Foreign Direct Investment (FDI) Inflows
Focus on Wealth Preservation and Intergenerational Transfer
Political and Economic Instability (as a limiting factor)
Specific what is unique to the Asia specific region market?
“Euromoney survey - c.70% of children of HNW and UHNW clients have a strongly different
world view to their parents”
How does this impact the industry ?
The Asia wealth management market is shaped by strong family ties, cultural emphasis on legacy, and a rapidly growing number of HNW and UHNW individuals. However, a significant generational shift is occurring, with about 70% of younger clients having different worldviews from their parents, leading to a focus on sustainability, ethical investing, and digital services, driving industry adaptation to meet these changing priorities.
Where do you think that private banking and wealth management clients from ? How are
relationships established, what is the ‘funnel’ for new clients. Discuss as a a group whether you believe that clients would use more than one wealth management adviser.
People with a lot of money, entrepreneurs, executives, people who have inherited wealth, high earning professionals – family offices – corporate clients
Establishing relationships: direct contact (meeting to discuss alignment), events to meet new clients, partnerships where people reach out, referrals and networking
Funnel process – known about the firm through the above channels, might have initial consultation/meeting (services offered, values etc), evaluation process comparing a couple firms see which fits their needs the most (other things like reputation), start working with them on a smaller scale just to test the partnership and strategies etc. Ongoing evaluation of performance, regular comms meetings, firm tries to retain them.
Multiple (advisors) - family office:
- Diversify - don’t want to put all their investments and be realiant with just one type of strategy
- Specialising with different areas like real estate, stocks, international markets
- Managing risk – help spread risk so all assests are managed by a single entity
One (UHNW) individual:
- Trusted advisor maybe used by other members of family
- Convenience of communicating and building string relationship with just one
- Might be more cost efficient
- Reducing risk of conflict between multiple advisors
