Private wealth management is an investment advisory practice which involves financial planning, portfolio management, and other combined financial services for individuals, in contrast to corporations, trusts, funds, or other institutional investors. From the client’s point of view, Private Wealth Management is the procedure of solving or improving their financial circumstance and attaining short, medium, and long-term financial objectives with the aid of a financial adviser.

From the financial adviser’s point of view, private wealth management is the process of delivering an entire range of financial products and services to clients, so that those clients can attain particular financial objectives.

Understanding Private Wealth Management

Some private individuals might not have sufficient time, or knowledge to manage their own finances. Hence, they seek the counsel of wealth managers who hold expertise in managing the finances of private, and frequently high-net-worth individuals (HNWI). HNWIs have distinctive financial situations which need higher diligence and a greater degree of active management.

HNWIs need a holistic approach to investment management compared to other individuals. HNWIs can have concerns with income taxes, estate planning, investment management, and other legal concerns which require careful attention and particular expertise over what traditional investment advisers are qualified to offer.

How Private Wealth Management Operates

Majority of the private wealth management firms are fee-based. They charge their clients a percentage of the assets under management. HNWIs might believe that fee-based financial advisors have less conflicts of interest compared to traditional commission-based advisers.

Commissioned advisors can push investors towards front-end and back-end load mutual funds that charge significant commissions, in many instances without providing any better performance than no-load funds.

Technological advances have enabled many bigger financial adviser organisations to offer services online at lower prices. Though many investors are ascending to these kinds of services, many HNWIs still need a more personalised approach to their finances, even with the additional associated prices.

Functions of Private Wealth Management

Private wealth managers leverage their expertise in different domains to help wealthy individuals handle their wealth efficiently. Following are some of the services provided by private wealth management companies:-

Generate Income

The first assignment of the Private Wealth Manager is to generate new income and develop the client’s existing wealth. Owing to inflation and the rising number of high net worth individuals, the client’s target is to stay at the top of the game and raise their purchasing power. With their appropriate experience in investments, the wealth managers should take benefits of different investment techniques which will generate extra income annually. They can aid their clients invest in hedge funds and private equity funds which might not be accessible to other individuals. Sometimes, they take the input of other investment experts, like the client’s attorney and other advisors, to aid them in making well-thought-out decisions.

Asset Protection & Capital Preservation

Private wealth management includes safeguarding client assets either from lawsuits, government authorities, or other threats. Wealthy clients can be sued for various reasons, including succession, marital issues, and property disagreements, and they can be forced to compensate the other parties if they lose the lawsuits. The wealth managers ought to be one step ahead of the game and create ways to manage the lawsuits, either by stopping them from occurring or by making favourable out-of-court settlements. They can also shift a portion of the client’s wealth to offshore banks to safeguard it from being over-taxed. The managers can advise their clients on how to set up trusts and foundations, and how to handle donations.

Tax Management

Owing to frequent multiple streams of taxable income, clients want to opt the most efficient tax plan which will be cost-effective and still abide with the authorities. A small change in tax can create huge differences in after-tax earnings, and a private wealth manager who comprehends tax regulations can help the client opt for the most favourable tax combination. The private wealth manager can also advise on inheritance tax, where the client owns inherited property or has passed some of their estate to other family members.

Labuan Private Foundation

Labuan Private Foundation can be your ideal source for Private Wealth Management. It is popular and favoured in the Asian region as it is governed by a robust legal framework and well regulated by the Labuan Financial Services Authority.

Advantages of a Labuan Private Foundation

• Founder has 100% control at all times.
• Founder is able to depict how the foundation is to be structured and managed, the types of assets to hold, and its beneficiaries with freedom to change anytime through the Charter.
• Founder can be an individual or a corporation.
• Relatively low cost to operate and maintain a Foundation compared to a Trust.
• Founder is protected from foreign claims and cannot be forcefully liquidated to satisfy other obligations such as claims arising from divorce, lawsuit or creditors after 2 years.
• It is a corporate body entitled to enter contact and perform lawful dealings.
• It is a legal entity fully protected by its own Labuan Foundation Act 2010, without the need to refer to other jurisdictions’ law.
• Duration/life span of foundation can be perpetual or for a fixed period of your choice.
• No minimum amount of assets requirement to be injected for initial set-up.
• Permissible to hold worldwide assets including Malaysian assets.

Labuan is an ideal jurisdiction to set up a Private Foundation which acts as the perfect vehicle to hold assets with the objective of managing them for a specified period. To know more, connect with QX Trust at +60 3 9212 6940 or consultant@qx-trust.com for a personalised complimentary consultation.