Although the term “wealth management” is relatively modern, the concept of wealth management has arguably been around for as long as the concept of wealth.  In the old days, ministers advised kings how best to manage crown funds (with varying degrees of success), these days, financial advisors advise individuals how best to manage their private funds (ditto).  As the old saying goes, the more things change, the more they stay the same.  Here are three ways wealth management is still the same as it has always been and will probably stay the same as it has always been.

The best wealth managers have the best people skills

There is nothing even remotely new about the fact that trust is usually a whole lot harder to earn than it is to lose nor about the fact that it is one of the world’s most valuable commodities and that therefore those who have earned it should do their best to hold on to it.  Unfortunately for the modern financial services industry, today’s generation of customers has seen plenty of evidence of blatant corruption in the financial sector, in particular mis-selling scandals in which financial professionals placed their own financial wellbeing ahead of that of their customers.  That being so, reputable wealth managers may need to work hard to build trust with their clients and to develop a good rapport with them so that they can have a fruitful professional relationship, which will benefit both parties.

The best wealth managers are experts at telling the truth gently

Like medical professionals, the best wealth managers often have to tell people what they need to hear rather than what they want to hear.  Just as doctors have to warn people about the dangers of mismanaging their body and to give advice on what their patient can do to improve the situation, so wealth managers have to warn people about the dangers of mismanaging their funds and to give advice on what their customer can do to improve the situation.  If the medical profession’s biggest challenge could be dealing with people who think “it’ll never happen to me”, the wealth-management profession’s biggest challenge could be dealing with people who have completely inaccurate assumptions about how much their dreams will cost them, for example, people who completely underestimate how much money they will really need to bring their retirement plans to fruition.  Breaking the hard facts of financial life to them gently can call for outstanding tact, diplomacy and general rapport and it helps a lot if your client likes you, hence the need for outstanding people skills.


Wealth management may be about figures but people are still driven by emotions


Read any beginners’ guide to investment and it probably won’t take too longer before you come across the advice to take emotion out of investment decisions.  While this statement is entirely understandable, it’s also, arguably, a classic example of “easier said than done”.  Humans are emotional although the same set of circumstances can trigger very different emotions in different people.  For example, if two investors saw a graph of the stock market plummeting downwards, one might feel fear while the other became greedy for opportunity.  Not only do people experience emotional reactions to situations.  Emotions can be much more than short-term reactions.  They can also be long-term drivers.  For example, people can be hugely emotionally invested in reaching a particular goal or avoiding a particular risk (even if their view of the goal or risk is totally illogical from an objective perspective).  Effective wealth management has to acknowledge this and roll with it as much as possible, while counterbalancing it and minimising it as the need arises.