Wealth Management – What’s In A Name

There are many reasons why we give things names. One, for example, is so that everyone knows what we are referring to. Take the word ‘table’. Most people would probably think of four legs and a top upon which we could put a cup.

Another reason for giving things names can be to make other people think the object is something it is not. Suppose I put a table cloth on a rock and put a cup on top. Would that rock now be a table? Yes, if I choose to call it a table.

This is one application of marketing. We could call it ‘spin’.

Something similar has been happening in financial services. Wealth Management is a great name. It conjurs up images of people managing wealth. But what does it actually mean?

The term originated in America, and Wikipedia defines wealth management as an investment-advisory discipline, linking the investment needs of a client to the investment expertise of the company. It was typically a firm with discretionary investment authority (look how Wikipedia ranks the worlds largest firms by size of funds under management, not turnover or profit or number of advisory staff). There is little suggestion of planning or personal financial advice.

And yet the term has been co-opted in the UK to describe a variety of services. We recently came across a client who was being courted by a ‘Wealth Management’ firm from central London. The firm had expensive offices and a large entertainment budget. They talked about personal service and understanding their client. I think the word ‘holistic’ may even have been used at some point. They turned out to be a Discretionary Fund Manager. There was no advisory service.

This firm was probably true to the label Wealth Manager, but they had blurred the definition by giving the impression of a more rounded, IFA-type service. Good marketing, you might say.

There are plenty of IFA practices who are adopting the term Wealth Manager. The word ‘Boutique’ is also making more of an appearance. In this instance marketing is being used to create the impression of a top end, personal service. In practice, these firms generally offer nothing different than Independent Financial Adviser practices which do not have the words Wealth, Manager or Boutique in their title.

But marketing happens because marketing works, and there are undoubtedly clients to whom this image appeals.

So, what next? Should all firms adopt this marketing approach? I am reminded of the Monty Python film Life Of Brian, when Brian is standing at the window in front of the masses. “You’re all different. You’re all unique.” And the masses shout back in unison “Yes, we are all different. We are all unique.”

I could bleat on about ‘we’re all in this together’ and about not trying to confuse the public. Perhaps we should ditch the name IFA and all call ourselves Wealth Managers? That idea wearies me. For now, I think the best we can do is encourage clients to get behind the name and gain a real understanding of what service they will really be getting. And, of course, to match that with their own requirements, so that they will not just buy into the marketing spin.

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12 thoughts on “Wealth Management – What’s In A Name

  • A better title would be “Wealth Management – what a w*nky term”

    Anyway, I agree Chris and refer to the Wikipedia definition as cited by yourself “investment-advisory discipline”. This is what I believe what wealth management to be; a more specialised investment centric service which the vast majority of “Wealth Managers” who use the term in the UK can never aspire to be.

    But it sound cool; its sounds a bit sexy so the term is bandied around in the hope of attracting clientele. Again, its the main reason why many IFAs still pick their own investments, mainly from an active panel, when they do not do the required DD to justify their selection. Its the glamorous part of the job; the Gordon Gecko piece. Using the term Wealth Manager to describe their service is an extension of this; no substance, no specialism and now no differentiation.

    Reply
  • Very thought provoking Chris. It amazed me when the FCA didn’t set any rules for how a firm described its ‘restricted’ advice service, other than to say that its description of this restricted service should be “fair, clear and not misleading”. I think the term ‘”wealth management” is fine as long as the supporting descriptions and the actual service being offered isn’t very restricted. I wouldn’t, for example be comfortable with a Bank adviser describing their service as wealth management, but I would be comfortable with a network-linked adviser, using 3 platforms, but actually not fully meeting the definition of independent using it.

    I can see the FCA getting round to taking action on exaggerated descriptions of their restricted service and actually mandating the use of the word “restricted”. That would be a challenge for marketers like me!

    Reply
  • The pressure to stand out from the crowd seems greater than ever before, whether you are a financial adviser or any other profession. I’m inclined to put it down in large part to technology – it makes information so accessible – and there’s so much of it!

    It fascinates me how so often what seems like the most basic stuff actually turns out to be hard. Coming up with cleverer and cleverer names to describe what you do – in order to stand out from the crowd – risks people not knowing what you do at all.

    Sometimes there’s a reason why well-worn terms are well-worn: surely everyone gets what a financial advisor or a financial planner does, even if a certain amount of nuance needs explaining. Wealth Manager sounds a lot like Investment Manager to me – and I would be surprised if I was alone in that.

    Reply
  • UPDATE – A client sent me a link to the result of a survey of investors by the FT. https://www.ftfeedbackforum.com/MediaServer/Shared/Personal%20Finance%20Survey%202014.pdf

    In 2014 18% of respondents said they expected to take advice in the area of Wealth Management.

    Wealth Management is a category of authorisation by the FCA relating to firms who offer discretionary fund management.

    So 18% of people said they were going to seek advice on a non advisory service.

    I strongly suspect that these 260 or so people didn’t actually understand what Wealth Management means.

    It’s not easy for clients seeking financial advice for the first time to know who to ask. The proliferation of this misleading term is simply confusing the marketplace.

    Reply
    • There is no FCA authorisation category called Wealth Manager unless I’ve missed something.

      Reply
  • The pressure to stand out from the crowd seems greater than ever before, whether you are a financial adviser or any other profession. I’m inclined to put it down in large part to technology – it makes information so accessible – and there’s so much of it!

    It fascinates me how so often what seems like the most basic stuff actually turns out to be hard. Coming up with cleverer and cleverer names to describe what you do – in order to stand out from the crowd – risks people not knowing what you do at all.

    Sometimes there’s a reason why well-worn terms are well-worn: surely everyone gets what a financial advisor or a financial planner does, even if a certain amount of nuance needs explaining. Wealth Manager sounds a lot like Investment Manager to me – and I would be surprised if I was alone in that.

    Reply
  • UPDATE – A client sent me a link to the result of a survey of investors by the FT. https://www.ftfeedbackforum.com/MediaServer/Shared/Personal%20Finance%20Survey%202014.pdf

    In 2014 18% of respondents said they expected to take advice in the area of Wealth Management.

    Wealth Management is a category of authorisation by the FCA relating to firms who offer discretionary fund management.

    So 18% of people said they were going to seek advice on a non advisory service.

    I strongly suspect that these 260 or so people didn’t actually understand what Wealth Management means.

    It’s not easy for clients seeking financial advice for the first time to know who to ask. The proliferation of this misleading term is simply confusing the marketplace.

    Reply
    • There is no FCA authorisation category called Wealth Manager unless I’ve missed something.

      Reply
  • Very thought provoking Chris. It amazed me when the FCA didn’t set any rules for how a firm described its ‘restricted’ advice service, other than to say that its description of this restricted service should be “fair, clear and not misleading”. I think the term ‘”wealth management” is fine as long as the supporting descriptions and the actual service being offered isn’t very restricted. I wouldn’t, for example be comfortable with a Bank adviser describing their service as wealth management, but I would be comfortable with a network-linked adviser, using 3 platforms, but actually not fully meeting the definition of independent using it.

    I can see the FCA getting round to taking action on exaggerated descriptions of their restricted service and actually mandating the use of the word “restricted”. That would be a challenge for marketers like me!

    Reply
  • A better title would be “Wealth Management – what a w*nky term”

    Anyway, I agree Chris and refer to the Wikipedia definition as cited by yourself “investment-advisory discipline”. This is what I believe what wealth management to be; a more specialised investment centric service which the vast majority of “Wealth Managers” who use the term in the UK can never aspire to be.

    But it sound cool; its sounds a bit sexy so the term is bandied around in the hope of attracting clientele. Again, its the main reason why many IFAs still pick their own investments, mainly from an active panel, when they do not do the required DD to justify their selection. Its the glamorous part of the job; the Gordon Gecko piece. Using the term Wealth Manager to describe their service is an extension of this; no substance, no specialism and now no differentiation.

    Reply

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