Wealth Managementt- (T.Y.

BMS)-
2
Sem
MANAGEMENT

INTRODUCTION TO WEALTH
1.1
Management sense
Meaning
combining
of Wealth
ofmanagement a practice that in
its broadest
personal investment management, financial advisory,
is
describes
and pllannin
Wealth
high-net-worth clients. There is no

directly for the benefit of

however there are many standa
offeringperspectives,
disciplines
Management;
definition arr
definition
based on two perspective product range
of Wealth and the die

scgment.

WEALTH MANAGEMENT

PERSPECTIVE

Product Range Offered Client Segment

According to popular investment

website Investopedia, "Wealth
combines finan
management high-level professional service that
is a accounting/tax
investment advice, services, retirement planning and legal/estate
manager who coordinat
planning for one fee. Clients work with a single wealth
advice from the clien.
input from financial experts and can include coordinating wealth managers ale.
oWn attorney, accountants and insurance agent. Some
activities".
provide banking services or advice on philanthropic
According to Investment Management Consultant Association (IMCAL
'a distinct field of practice through which qualified professionals help high net
worth client achieve their goals and objectives related to accumulation, protection
and distribution of wealth by applyinga set of specialized knowledge and skill"
According to Robert J MeCann, President of the Private Client Group
at Merill Lynch, Wealth Management addresses every aspect of client's
financial life in a consultative and a highly individualized way. It uses
complete range of products, services and strategies. A wealth manager has to
gather information both financial and personal to create an individualized
series of recommendations, and be able to make these recommendations
completely tailored to each client. Off the shelf - it won't do. What wealth requires
is connecting with clients on a personal level that's way beyond the industry
norm".

Wealth management as an investment-advisory discipline incorporates

financial planning, investment portfolio management and a number of aggregated
financial services. High-net-worth individuals (HNWIs), small-business owners
and families who desire the assistance of a credentialed financial advisory
specialist call upon wealth managers to coordinate retail banking, estate
planning, legal resources, tax professionals and investment management. Wealth
managers can have backgrounds as independent Chartered Financal
Consultants, Certified Financial Planners or Chartered Financial Analysts (in the
USA), Chartered Strategic Wealth Professionals (in Canada), Chartered Financial
Planners (in the UK), Chartered Wealth Management (WM USA) or any
redentialed (such as MBA) professional money managers who work to enhance
the income, growth and tax-favored treatment of long-termn investors.
A type of financial service that combines personal investments, tax planning
strategies, estate planning and legal counsel. It is designed to provide a broad
array of services within the confines of one office in other words ONE STOP
 Introduction to Wealth Management 3

SOLUTION. Wealth management combines both financial planning and

specialized financial services, including personal retail banking services, estate
planning, legal and tax advice, and investment management services. The goal of
wealth management is to sustain and grow long-term wealth. The net worth
needed to qualify for wealth management services vary among institutions, but
the net worth threshold typically starts at about $20 million. Also, depending on
the institution, the range of services available is highly customizable in order to
meet the specific needs of the client.
Another perspective of defining Wealth Management is on the basis on
the client the wealth manager aspires to cater to:
According to Mckinsey Global Wealth Management Survey 2014, "Wealth
management is defined as a relationship between an advisor and an individual or
a household. Wealth mnanagers are broadly defined as financial institutions
serving individuals with at least USD or EUR1million (EUR is calculated at USD
1.33) personal financial assets. Private banks (most players in Europe and some
in the US) typically offer banking, investment, lending, and other financial
services, while other wealth managers (mostly in the US) have a variety of
different business models from the traditional investment-oriented firms to some
credit-oriented private banks.
Many differences in the minimum wealth threshold exist. In the US, for
example, many players also serve households with less than USD 1 million, while
in Western Europe some private banks begin offering service to households with
EUR 200,000 (USD 260,000). However, the services offered to these households
differ considerably from what may be provided to wealthier clients.
Generaly Accepted Client Segment definition on the basis of Investable
Assets

Segment Investable Asset

Retail USD 50,000

Mass Afluent USD 100,000

Affluent USD 200,000
USD 10,00,000to 50,00,000
High Net Worth (HNW)
USD 50,00,000 to USD 300,00,000
Mid Tire HNWI
USD300,00,000 & Above
Ultra High Net Worth Individual (UHNW)
Global HNWI as per the
Let us understand the population of the
Capgemini && RBS World Wealth Report HNWI % of
Number of HNWI Population
Wealth HNWI
Individuals
Wealth
2014 2014

Growth CAGR Growth

CAGR
2013 - 2009 - 2013 -
2009 -
/+US$30m 2014 2014 2014 2014
Ultra-HNWI 7.4% 34.7%
139.3k 8.4% 8.6% 7.2%

(1.0% of
US$Sm-US$30m total) 22.4%
7.7% 8.1% 7.8%
Mid-Tier Millionaire 1.325.0k 8.1%
(9.0% of
total)
7.9% 6.7% 42.9%
USSIm-USSSm 13,185.2k 7.8% 6.6%
Millionaire Next Door (90.0% of
total)
2017
1§ = 66.83 as on March
1million = 10 lakhs
 Wealth Management -
4

1.2SCOPE OF WEALTH MANAGEMENT (T.Y. BMS)-(Sem

The scope of wcalth managcment is broadly in these three arcas
1. Wealth Accumulation & Development
One needs to set a goal and start saving. Nobody plans to fail.
but
people fail to plan. It's cliché, but true. One has to get aggressive, get a plenty
place and stick to it. Find an advisor that will educate instead of dictate. plan
has an approach based on diversification, asset allocation and who hasOne whin
clients'best interests in mind at all times.
2. Wealth Protection
their
The key here is risk management. This can entail developing
ways
wealth from generation to generation by the use of trusts, having a to transfe
or adequate liability coverage, or
care or insurance plan in place
to minimize tax. This leads us to our next tip. developing long-terTM
3. Tax minimization strategies
One often overlooks ways to increase profits without
is through successful tax planning. Because most changing anything el,
people
knowledge and experience necessary to take advantage of everydotaxnot have
are eligible for, it is important to have someone on your benefit the
side who understands
planning
In its simplest terms, wealth management can
be
all-encompassing formula : Wealth management = summed up using a single
investnent
advanced planning + relationship management (or WM =IC + AP consulting.
+ RM)
India has registered tremendous growth in terms of
and their wealth after crisis. HNWI in the population of HNWI,
India consists of 8% of the total wealthu
households but constitutes around 45% of the total
HNWIs in India, only 20% conSult financial advisors. wealth. Among the total
Also, around 69% of the Indian HNWI
55, which has long term investment plans and
population is in the age group of 30.
thus requires financial planning
and advisory asset management. Around 39% of the
HNWI wealth has been
accumulated on the basis of business income, leading to demand
solution which can help to protect wealth and mitigate risk. of Taxplanning
limited understanding of the risk and retuns Indian HNWIs have a
associated with investment
products and thus require personal attention and
assurance
managers which has led to a growing importance of face to face from wealth
management has a huge demand. relationship
From traditionally concentrating on metro cities,
started focusing on Tier II and Tier II cities by settingwealth managers have now
up their operations there.
Among the institutions operating in the wealth
banks are largely dominating the space with playersmanagement industry in India,
Kotak. like ICICI, HDFC, and
HNWI Of Indian Wealth Management
Forecast (2010-2015) is a study of the needs Industry - Trends, Analysis And
and demands of HNWIs in India
The report will provide new insights and give
recommnendations
nanagement firms intending to capitalize on the HNWIs in [Link]
wealth
oifurcation of wealth management products and services needs will
roduct development and provide a roadmap to the enable
future of novel wealth
nanagement practices for the HNWIs.
India's HNWIs wealth will grow by aCAGR of 12% and it will
reach close
 5
Introduction to Wealth Management
to $949 billion by 2015.
Wealth manager now started 1ocusing on Tier II and Tier
III cities.
HDFC,
Top players in India wealth management Industry includes ICICI,
and Kotak
population, India
To cater to the growing HNI, UHNI, Expatriate & NRI
words, a
currently needs close to 1,00,000 qualified wealth managers. In other
banking and wealth
student or a professionmals aspiring for a career in private
management
industry is
The biggest challenge confronting the Indian wealth managementAt the same
people. As a nascent industry there is a restricted resource pool.
management
time the opportunities in India are luring ever-more wealth
with relevant
organisations, therefore increasing the demand for people
qualification.
India.
There shows tremendous scope of wealth management services in
1,3 COMPONENTS OF WEALTH MANAGEMENT

Fiduciary
Services

Accounting Cash flow

manage
ment
repoerting

Wealth
Management
Investment
Tax
PLanning Planning

Trsut and
Estate
Legal
Advice
Planning

report 2004
Source:Capgemni/ Merill Lynch World wealth
the various services provided by
The components of Wealth management are
client. The following are the services
the wealth management fitm to their
provided by the wealth management firm.
1. Fiduciary Services
person or firm that has agreed to act for
A fiduciary is generally defined as a produces a relationship
and manner that
and on behalf of someone else in a role
of trust and confidence.
manager to invest his money in
E.g.: When an investor requests a wealth
fund manager will invest on behalf of
Portfolio Management Service, where the
the [Link] fundmanager is acting in a Fiduciary Position.
2. Cash Flow Management
projection aspect for a client. Without
clear
Cash Flow is a very important
impossible for a wealth manager to
picture of cash flow both in and out it will be
plan and implement the wealth plan.
 Wealth Management-
6

3. Investment Planning Ser

([Link]).
Investment Management is the professional management
securitics and asscts in order to mect specificd investment goals for theof var
the investor. Securities include investment options like shares,
funds, structured products, pension funds, real estate & debt, beneft
Investment planning includes asset allocation and advisory function commodities
4. Legal Advice
Wealth Management services also provide legal advice in matter
estate, nomination etc. Wealth manager of course would request you
your lawyer. However in matter of financial product would advise you onto cons
nomination and how should you be going to transter you property need
cfficient manger. 1n a
5. Trust & Estate Planning
Estate planning is the process of anticipating and arranging for the
of an estate. Estate planning typically attempts to eliminate the ispo
over administration and probate and attempt to maximize the
by reducing taxes and other expenses.
value of the uncertaints
estat
6. Tax Planning
When managing a large pool of investments a small
translate in big change in post-tax returns. Different change in tax rate.
taxed differently for instance interest received on financial instrumente
long term capital gains received from stocks.
bonds is tax differently
Though
chartered holder to certify the books of accounts the wealth manager is no
provides advisory services with regards to how to however the wealth man
using ideal mix of financial maximize post tax returns b
instrument, keeping the risk profle and th
investment objective in mind.
7. Accounting & Reporting
Wealth Managers provide various reports to the
understand. their gain/loss position and also these investor in order
understanding their Tax liabilities. reports help them
Components of Integrated Wealth Management Services
Components of Wealth Managemnent also cover the Types of
wealth
Integrated Wealth Management
Asset Structured Financial Planning Bank Services
Management investments Others Services
Portfolio Hedge Funds
Management Tax Strategies
Branch Banking Economic
Asset Alocation Private Equity Research
Estate Planning Credit
Equities Sales Capital Protected Retirement/ Pension Transaction Equities Research
(Aus and int) Products Int Rates and FX
Brokerage Planning Management Research
IPO Access Sophisticated Self Marnaged Super Interest Rate & FX
investor Products Funds Risk Management
Corporate
External Structured Advisory
Investments Cash Fixed Real
Investment Funds Transactions Estatt
Structures Interest Rate Advisory
Internal Products
Investment Funds Foreign Currency Art Advisory
Accounts
Derivatives/Asset Internet Banking
Monetization
Portfolio
Administration
 7
Introduction to Wealth Management
Management service providers
Currently in India there are majorly three types of wealth management
service providers viz. Banks, Brokerage firms and Boutique advisory firms.
Banks
which means
Banks are known to have larger investment distribution model
but on a large
that they do not concentrate on only one investment options
segment clients
investment portfolio. Further they cater also to mid-level
advantage of an active investor
apart from the HNWI's. Banks have an inherent
analytics one can
base with CASA (Current A/c & Saving A/c). If one uses
providing the right investment
cater to needs of the customers profitability by
advice.
Brokerage Firms
majorly in shares
Brokerage firms focus on investing the customer's money
and IPO which are equity market products.
Boutique advisory firms
customized financial solutions
Boutique advisory firms are known to provide
(greater than USD 30 million)
to the clients which are majorly the ultra-HNWI's
and HNWI's(USD 1million to 30 million)

1.4PROCESS OF WEALTH MANAGEMENT

1. Data Gathering to
identify the curent
situation

2. Define the terms

8. Review and of engagement

Revision

3. Goal Setting
7. Implementation

4. Identification of
Needs
6. Report
Preparation
5. Analyzing the
opportunities and
challenges

situation
Data Gathering to identify the current
and liabilities, income and
Establishing details about your assets
already in place and the networth
penditure. Understanding arrangements effects
situation is the result of the cumulative
atement. An individual's current
 Wealth Managemernt -(T.Y.
of all of the financial decisions and transaction that have occurred in
.BMS)-$he Sem pa
time
untilthe current
E.g.: The client will give details of all the Fd's, Equity, debt and oth
investment the client wil also share his liabilities and other financial details

2. Define the terms of engage ment

Wealth Manager for providing his services has to define the terms
cngagement, the service
deliveried and the fees the wealth manager is
to charge the client for his services. The terms of engagement can be formalizgoiny
in a written Memorandum of Understanding (MOU) which can contain th.
following
i) Details of Each Party's responsibility
i) Time frame of the engagement
ii. Compensation
iv) Conflict of interest
E.g.: Aclient might request a wealth manager to enter in to agreement fo
2 vears & then review the terms of compensations.
3. Goal Setting
Establishing your goals and aspirations for the short and long ter
Understanding your commitment to meeting your objectives.
Wealth goals could be buying a new home, a new car, holiday abroad, child.
education, retirement etc. The wealth manager has to understand which go
are most important. The wealth manager also has to make the invest
understand how to set SMART goals i.e. S-Specific,
A- Achievable, R- Realistic, T - Time Bound. M-Measureab]e
E.g.: Aclient might set a goal to retire by the age of 60
life style.
maintaing his curren
4. Identification of Needs
We will analyze your current position and
assess any gaps in your situation
Next we will identify what needs to be done to
to understand the risk profile of the client.
meet your objectives. Also attemp
Risk profile is a systematic proces
undertaken by wealth manager to determine the risk taking
through a set of pre-determined questions. ability of the clien
E.g. Trying to understand the stage of the life cycle
could be wealth accumulation, preservation, the client is in which
distribution etc.
5. Analyzing the opportunities and
challenges
Analyzing the opportunities and challenges is explaining
factors associated with each investment the client the risk
alternative that the wealth manager
proposes i.e. conducting a SWOT analysis Strength,
threats. Weakness opportunities and
E.g.: A wealth manager explain
market risk. Please read the offer that Mutual Fund, investments are subject tu
6. Report Preparation
document carefully before investing.
The analysis and
presented in recommendations after consultation with the client art
written report. This forms the basis of a formal review at which w
agree on an action plan. The
report includes the investment objective, th
 9
Introduction to Wealth Management
suggestion and recommendation of the wealth manger, the opinion and clauses
discussed by the clicnt, the risk factors and disclosures made by the wealth
manager etc.
7. Implementation
Effecting the plan will invariably involve new and changed arrangements. We
liaise with providers and other professionals to implement the agreed plan.
8. Review and Revision
Wealth management is a long term plan that requires regular annual review.
Changes in your circumstances are considered as well as fund performance.
E.g.: If the markets are weak due to global impact and macro-economic
indicators the wealth manager may review the plan and suggest the client to stay
in liquid assets.

1.5 NEED FOR WEALTH MANAGEMENT (Nov., 2016)

1 Growth of HNWI andUHNWI

High Net Worth Individual (HNWI) are generally defined as private
individuals with more than USD 1million of investable assets.
Ultra High Net Worth Individuals (UHNWI) are private individuals with
more than USD 30 million of investable assets.
India ranks 14th in the McKinsey Global wealth survey and India is expected
in the world. Which
to be in the top 10 HNWI and UHNWI population destination
advisory services to
shows scope for wealth managers to provide need based
order to achieve their financial
clients to manage and grow their wealth in
objectives.
2. Time Constrains
constrains for any
Research shows time and expertise are the two major
constrains for almost
individual to manage his/her own wealth. Time is a major
business or profession
all HNWI's as they are usually busy with their
Example: A doctor who is a surgeon will spend major
time in understanding
the movements in the
the complexities of the patient's surgery than tracking
wealth manager who
equity markets so the doctor prefers to hire services of the
manage his investments and hecan continue focusing
on his profession.
will
3. Expertise
disposal however may
Many HNWI's and UHNWI's may have the time at their
they require services of
lack the expertise to do informed asset allocation so
wealth management firm.
Example: Diya is the owner of a very big estate she
has time at her disposal
However, she lacks expertise as to
as most of her estate is managed by her staff.
invested, also she desires to transfer
which asset class her investment should be
would create absolutely no
her estate to the next generation in a manner, which
usual. So Diya can take
conflict in the family members and the business runs as
management firm.
expert advice from the Estate Planning services ofa wealth
4. Complexities in Financial Products
Financial Markets are getting more and more complex
and so are the
risk
bfferings. It requires more than just basic knowledge to understand the
2TYBMS. Wealth Management (Sem.- V)
 Wealth
Management

derivate
and
- (T.
[Link])-(Sem
Swaps
I0 financial
i n s t r u m n e n t s
like
Hen
desirable.
complex
firm are Contract are
associated

services
with

of wealth
m a n a g e m e n t

Gold ETE,
Forward
and
Futures

investor may not be Compl

Mni Nifty,
Which an ordinary
Example:
investment instrumen ts.
globalize d
getting
completely.

Financial
Products are
getting
financial
products are
the risk with multi globaliz
5.
With the
advent of
Investor
globalization

need to
understand

provide a Count
holistic view
Manager
comnplex. Wealth while advising
and more complexities

nulti-currency

to
exposure.
account
these the
and take in
and
world market Blackrock Worid Gold
clients. Equity Fund,
DSP
Equity Fung
Example: ICICI Global Stable
Equity Fund, J
P Morgan Asean Fund ar
ICICI prrudential US Blue Chip investing abroad in multi country, differeny
India
example of Mutual Funds in exposure.
multi-currency
have
asset classes and Services
Fee Based based services
6. Rise of huge rise in fee
there is a
Globally and in India favour of transparent
fee based servicee.
regulator is in banned the
commission. Also the regulator in India
the stock market
commission model. SEBI brokers
mutual funds from July 2009. This has forced
load (Commission) on
upgrade to wealth advisors.
agents toenrich their knowledge and
(CWM) and Chartered Financis
Example: Chartered Wealth Manager
post 2009 as brokers and agents had
Planner certification has become popular
clients would pay fees only if th
upgrade skills to be Financial Advisors and
approach of conmission on sale
found the advice valuable v/s the earlier
financial products
7. GoalAttainted
Financial Goals like getting married, planning honeymoon, holida
abroad, buying a home, a new car, retiring comfortably require the assistance g
wealth management services to plan scientifically and save for attainmnent of each
goal.
Example: A wealth management firm may recommend annuities to a clien
tosave and plan his retirement comfortably. The firm may recommernd insurance
plans for wealth protection in case of any eventualities.
8. Wealth Transfer
There is a strong need for transferring wealth from one generation to another
in a tax efficient manner and also in a manner which does not give rise
to famil
disputes. Wealth managers provide Estate planning services where wealth
transfer becomes smooth and without any hurdles.
Example: Priyamvada Birla's will is a battle of billions, to avoid
disputes & controversy one can hire services of a any such
wealth manger.
1.6 CHALLENGES TO WEALTH MANAGEMENT IN
INDIA
1. Regulatory environment
The regulatory environment
which there still is substantialof the Indian economy is still evolving because 0
vagueness in the jurisdiction of
numeroU:
 Introduction to Wealth Management 11

regulators. And one of the reasons of wealth managers not experimenting with
innovative products is because of the vigilant measures of the Indian regulators.
Also looking at the various products, the commodities, derivative and bond
market is not as mature as the equity market in India.
Example: Capital guarantee Schemes are viewed with suspicion by the
regulator so firms prefer not to launch such products.
2. Entry blockades
Another important challenge for potential wealth managers is setting up
locations for which they have to pay a heavy property price. The increase in the
real estate prices in the last decade or so has acted as a deterrent. Moreover this
factor of having physical locations cannot be avoided as wealth management as a
service, requires that physical presence to build client relationships.
3. Finance literacy
The awareness about the financial products that are available is low among
the target population. Also there is sense of insecurity among the investors due
to scams, harmful practices of some adviser and absence of investor protection
environment. All this has led to a very narrow minded view among investors
regarding certain investments which are long term.
4 Sector reach
The HNWI are attended by foreign banks and other large brokers but its
reach is limited only to the metropolitan areas. And according to the statistics
20% of the HNWI population lives outside the metros which are served by the
unorganized players. Therefore for this sector to expand, its reach will play an
important part in arresting the untapped wealth and transforming it to assets
under management.
5. Product and Service offerings
Though there has been great improvement in the product portfolio being
other mature market
offered to investors the standards do not match with that of
providers will have to
players. In order to succeed the wealth management service
Even innovating could
innovate in terms of meeting the diverse customer needs.
environmert, coupled with
pose a challenge in the obstructive regulatory
preserving the product structure and pricing transparency.
multiple accounts
6. Providing consistent advice delivery across
multiple advisors and accounts
The ability to offer consistent advice across
management practice. By
can make the difference in running an efficient wealth
model portfolios to streamline the
leveraging institutional-calibre analytics and
technology can help firms achieve great
process of creating investment proposals,
consistency in advice delivery.
7. Curtailing time-intensive processes
maintaining client trust is a multi-faceted
The process of establishing and that
aid in that process by offering tools
and complex one. Technology can portfolios and
streamline manual and often-disjointed tasks. For example, the
balance-sheet
accounts of a household can be
better managed via a household
end-to-end goal-directed platform that give
approach to financial planning and an picture. Likewise,
the client's entire financial
an advisor more insight into
automating rebalancing with technology as part
of standard operating procedure
 Wealth Management - ([Link])-(Sem
and
12

organizations easily
management
missteps
avoid portfolio a d v i s o r / c l i e n t relationship. enable
helps furthering the
advisors tospend more time
risk tolerance are a variety of
8. Iden tifying clients'
top the list, there measures risk reasong
that a thorough risk
comnpliance
While liability and assessnent process
qucstionnanire
which
and includes an audit trail ha
toleranc,
An online
via the traditional
beyond the scope of
profile
assigns a risk Going riak
cnucial.
become cxceedingly
wealth ndvisors that
undertake a more holistic,

to create a
balance.
questionnaire,

sheet approach to
however,
investment
management are able
equity and fixed incor
methodology
conplete risk structure is modelled, not just
whereby the
andMoss retaining advisors
9. According to
Attracting Adams' 2008 study, Financial Performance of Advisory
challenge, with nearly ali
the advisory industry faces a serious staffing every leve
Firms,
firms experiencing rapid growth and a need for staft at
the largest developing comprehensive technology
platfor
More and moreorganizations are streamline advi.
enhancing an advisor's ability to
that incorporate tools for
that are easily deployable to hundreds
delivery. Providing tools and resources
thousands of advisors is an important requirement.

MANAGERS
1.7 CODE OF ETHICS FOR WEALTH
kind of policy statement
A code of ethics issued by a business is a particular
legislation within the company
A properly framed code is, in effect, a form of violation of the code. It may
binding on its employees, with specific sanctions for business or
and values of the
be a document which may outline the mission
to approach problems,
organization, how professionals are supposed
the standards
the ethical principles based on the organization's core values and
to which the professional will be held.
i) Association of International Wealth Manager (AIWM) Code of Ethics
The Association of International Wealth Management ArWM is a non-profit
association established to encourage, promote and strengthen global education in
the private banking industry and to set a globally recognized standard for the
qualification of private banking professionals. The AIWM objectives seek to
ensure the highest ethical conduct of its members and thus contribute to the
integrity of global capital markets.
To fulfil the responsibilities resulting from their activities as Wealth
management/ Private bankinglprofessionals, certain standards must be met. To
encourage the independent, diligent, professional and ethical behaviour of Wealth
management professionals, the AIWM has established a Code of Ethics, defining
globally accepted standards for. the professional conduct of Wealth managers
world wide.

All members of the AlWM accept the obligation to uphold and abide by the
association's
Rule 1Principles of Professional Ethics
Members shall exercise their profession in an independent, integer, diligent
and professional as well as ethical manner. They undertake in all cases to g
priority to the interests of the clients and commit to treat them fairly. Tht
principles of professional ethics can be divided into four fundamental principles:
 13
Introduction to Wealth Management
C Independence : Members must exercise independent and objective
judgement in their professional activities.
Integrity : Members must preserve their professionaland personal integrity.
Professionalism and diligence : Members must always act as qualified
professionals and perform their activitics with the diligence required from
qualified professionals.
Loyalty and priority of the cllents' interests : Members owe a duty of
loyalty to the clients. They must under all circumstances give priority to
the clients'interests and ensure that they are treated fairly and equitably.
Rule 2Compliance with Applicable Rules
Members shall know and comply with the provisions of the laws, regulations
and self regulatory rules as well as all internal rules of their employer that are
applicable to their activities. Members must comply with the provisions of laws,
regulations and rules enacted by self regulatory bodies. They must also abide
with the internal guidelines issued by their employer. Breaches of the applicable
rules may result in different consequences, such as termination of employment,
barring from exercising regulated activities, civil liability, fines and imprisonment.
It is the duty of each member to maintain knowledge of the legal framework
applicable to advice concerning the applicable rules and requirements.
Rule 3 Duty of Information
Members must ensure that the information they provide to clients and
investors is clear and accurate. They are prohibited from promising a given
return. They must communicate information to investors and clients on an equal
basis. Information is one of the core aspects of the activities of wealth managers.
Thus, it is of essence that the information communicated by members to cliernts
and investors be:
clear, i.e. understandable by the recipients of the information and not
misleading;
accurate, i.e. the information provided must be correct and reliable and
must include all disclosable elements that are necessary for the recipients
to understand and make use of the information; well suited, i.e. the
information must to the extent possible be adapted to the needs, financial
situation and objectives of the recipients and must not contain elements
which are not relevant or misleading for the recipients or omit elements
which are decisive for the potential decisions of clients and investors;
C provided on a timely basis and in compliance with the general principle of
equal treatment of investors.
Rule 4 Conflicts of Interests
Members shall avoid any situation of conflict with interests of clients and
investors. If a conflict cannot be avoided, priority has to be given to the interests
of the clients and investors. Members treat the interests of clients and investors
in accordance with the principle of equal treatment. Members have to disclose
any fact affecting their objectivity and their independence.
Conflicts of interests arise in any situations where interests of clients and
investors may clash with the personal interests of a member, his employer or
other thirdparties. In connection with conflicts of interests, the duty of loyalty
entails the members to comply with the following principles:
Rule 5 Personal Investment Transactions of Members
Members have a duty of loyalty to clients and shall not cause prejudice to the
clients' interests when making personal investment transactions. Members shall
not spend more than a reasonable amount of time on personal investment
transactions, and their investments shall be in adegquacy with their financial
 Wealth Management-
-([Link])
14
observeto all
applicable
Jocal and foreign Semy
regulations and guidelines
Members shallrelating securities dealing (insider trading, Tmatks
resources.
manipulation, front running, ctc.), which are applicable to then. As a genet

prohibited from
dealing in the securities
should not be However, when
rule, members
which they invest clients'
assets.
observe the following makin
recommend or in
personalinvestment
members shall
transactions, principle
Employer
the thcir
Members
Rule 6 Duty toshall inform
Inform employer that they have to comply with thea
of Professional Ethice
Fundamental Principles As
Rules of Conduct and should inform their employer that they are a member
the Association
general of International Wealth Management and are therefore bound b
rule, members
Professional Ethics
Fundamental Principles of
these Rules of Conduct and
Rule 7 Sanctions
professional conduct by a syst
The effectiveness
professional of regulating
standards arises from the existence of efficient penalties, recognise
as such and in the profession. Thus, while the rules of law impose behavioy
regulations from outside, deontology specifically consists of rules devised
much in the interest.
accepted and applied by the members of a profession, as
preserving its image and credibility in
that profession as in the interests of degree of importance
minds of clients and the public. Because of the high
the Association of International Wealth Management places on the present R
ofConduct, the AIWM allows its Board to apply the following disciplinary procedures.
a warning,
the revocation of the diploma of Certified international Wealth Manans
(CIWM®),
" the exclusion from the association.
iü) FPSB Code of Ethics
Financial Planning Standards Board India is a Public Private Enterprise and
a Professional Standards Setting body that proactively guides the essionals t
benefit and protect the public in the country. FPSB India closely works with al
the stakeholders'viz. the Government, the Regulators, the Industries/ Associations
the Corporate, the Media and the General Public toachieve itsobjectives. It is :
Professional Membership & Certification organization-part of leading Globa
Confederation established by prominent financial service corporations with an
objective to professionalize the concept of Financial Planning in Indian.
FPSB India adopted the Code of Ethics to establish the highest principles and
standards. These Principles are general statements expressing the ethical and
professional ideals CFPCM Certificants are expected to display in thei
professional activities. As such, the Principles are aspirational in character and
provide a source of guidance for Certificants. The Principles form the basis d
FPSB India's Model Rules of Conduct, Practice Guidelines and Disciplinary Rules
and these together reflect FPSB India's recognition of Certificants' responsibilities
to the public, clients, colleagues and employers.
Code of Ethic 1 - Client First
Placing the client's interests first is a hallmark of professionalism, requirin
the Financial Planning professional to act honestly and not place
advantage before the client's interests. personal gain o
Code of Ethic 2 - Integrity
Provide professional services with integrity. Integrity requires
candor in all professional matters. Financial Planning honesty an
professionals
positions of trust by clients, and the ultimate source of that trust is are placed i
Planning professional's personal integrity. Allowance can be the Financa
made for legitimat
 15
Introduction to Wealth Management
subordination
cannot co-cxist with deceit or
differences of opinion, but integrity Planning professional to
requires the Financial
of one's principles. Integrity spirit of thc Code of Ethics.
observe both the letter and the
Code of Ethic 3 - Objectivity rcquires intellectual
Provide professional services objcctively. Objectivity capacity in
honesty and impartiality. Regardless
of the servicea delivered or the Financial
functions, objectivity requires
which a Financial Planning profcssional of their work, nanage conflicts and
to ensure the integrity
Planning professionals
exercise sound professional judgment.
Code of Ethic 4 - Fairness
relationships. Disclose and manage
Be fair and reasonable in all professional clients what they are due, owed
providing
conflicts of interest. Fairness requires relationship, and includes honesty and
professional
or should expect from a interest. It involves managing one's
own
disclosure of material conflicts of Fairness
feelings, prejudices and desires to achieve
a proper balance of interests.
manner that you would want to be treated.
is treating others in the same
Code of Ethic 5 - Professionalism
exemplary professional conduct
Act in a manner that demonstrates respect and courtesy
Professionalism requires behaving with dignity and showing activities, and
in business-related
to clients, fellow professionals, and others professional requirements.
complying with appropriate rules, regulations and individually and in
Planning professional,
Professionalism requires the Financial public image
enhance and maintain the profession's
cooperation with peers, to
and its ability to serve the public interest.
Code of Ethic 6 - Competence
provide professional
Maintain the abilities, skills and knowledge necessary to
and maintaining an
services competently Competence requires attainingprovision of professional
adequate level of abilities, skills and knowledge in the
recognize one's own limitations
services. Competence also includes the wisdom to
appropriate or referral to other
and when consultation with other professionals is
Planning professional
professionals necessary. Competence requires the Financial
improvement.
to make a continuing commitment to learning and professional
Code of Ethic 7 - Confidentiality
Protect the confidentiality of all client information Confidentiality requires
manner that allows
client information to be protected and maintained in such a
relationship of trust and confidence
access only to those who are authorized. A
on the understanding that the client's
with the client can ony be built
information will not be disclosed inappropriately.
Code of Ethic 8 - Diligence
Provide professional services diligently Diligence requires fulfilling professional
commitments in a timely and thorough manner, and taking due care in planning,
supervising and delivering professional services.

QUESTIONS

Answer the following questions :

1. Define Wealth Management &Explain the scope of wealth Management in
India
2. Describe the various customer segments in wealth managerment.
3. Explain the components of wealth management
4. What is wealth management? Explain its process.
 Wealth Management -(T.y,
16
Explain the
need for wealth
BMSHe
managenent.
5. What is wealth management? (Nov., 2016) (Ref.
management.
Pg. N
Briefly Code of the
What isdescribe challenges
Ethics? of wealth
Explain the code of ethics in wealth managene
6.
7
different bodics. services in India
management
8 Bxplain the importance
of wealth

Explain the following concepts

1. Wealth Management
2. Financial Planning
3. Code of Ethics

4. High Net worth Individuals

5. Ultra High Net worth Individuals
6. Private Banking Services
7. Fiduciary Services
8. Boutique advisory firms

OBJECTIVE QUESTIONS

I. Fil in the Blanks :

1. Wealth Management addresses every aspect of client's in a consultati
and a highly individualized way
b) Personal life c) Busin ess
a) Financial life
2. Full form of HNWI:
a) High-net-worth individuals
b) High net worth industries,
c) High national wealth industry
3. The goal of wealth management is to sustain and grow wealth.

a) Long-term b) Short term c) Medium term

4. A is generally defined as a person or firm that has agreed to act for an
on behalf of someone else in a role and manner that produces a relationshi
of trust and confidence.
a) Fiduciary b) Cash Flow Marnagement,
c) Legal Advice d) Tax Planning
5. Banks are known to have
a) Larger investment distribution model
b) Large business models
c) Smaller investment distribution model
6 focus on investing the customer's money majorly in shares and
which are equity market products.
a) Brokerage firms b) banking institutions c) business firms
7. India banned the entry load (Commission) on mutual funds.
a) SEBI b) IRDA c) RBI
8. The regulatory environment of the Indian economy is still evolving because
of numerou
which there still is substantial vagueness in the
regulators.
a) Jurisdiction b) Legislature c) democracy
 17

Introduction to Wealth Management letter

Planning professional to observe both the
9. requires the Financial
the Code of Ethics
and the spirit of b) client first c) objectivity
a) Integrity or should expect
what they are due, owed
requires providing clients and disclosure of
10.
professional relationship,
and includes honesty
from a
materialconflicts of interest. c) integrity
b) client first
a) Fairness
between an advisor and
an individual or a
relationship
11. is defined as a
houschold.

a) Wealth management
b) investment managenent
c) financial advisory
management does not include
12. Scope of wealth
Development
a) Wealth Accumulation &
b) Wealth protection
c) Tax minimization strategies
d) Cash flow management
management includes
13. Components of wealth
Wealth Accumnulation & Development
a)
b) Wealth protection
c) Tax minimization strategies
d) Cash flow management

II. True or False

describes the
management is a practice that
in its broadest sense and
1. Wealth financial advisory,
investment. management,
combining of personal high-net-worth clients.
planning disciplines directly for
the benefit of
monies of
in a fiduciary position when managing
2. Wealth Manager Usually act
Portfolio Management Services
their clients especially in
systematic process undertaken
by wealth manager to
3. Risk profile is a the client through a set of
pre-determined
determine the risk taking ability of
questions.
the offerings.
more and more complex and so are
4. Financial Markets are getting commission.
huge rise in fee based services v/s
5. Globally and India there is a available is low among
financial products that are
6. The awareness about the
the target population.
anong the investors due to
scams, harmful
7. Also there is a sense of insecurity protection environment.
absence of investor
practices of some advisers and statement.
business is a particular kind of policy
8. A code of ethics issued by a
in an independent, integer, diligent
9. Members shall exercise their profession
and professional as well as ethical manner.
their activities as Wealth
10. To fulfil the responsibilities resulting fromn
bankinglprofessionals, certain standards must be
management/Private
met.
 18 Wealth Management - (T.Y,)
III. Match the following : BMS){Ser,
Kind of policy statement
1 Wealth management
2 A code of cthics Financial planning
3 Components of wealth management Tax minimization strategies
4. Scope of wealth management Cash flow management
5. Need for Wealth Management
Association of International
Manager
N. Match the following
1 Challenges to Wealth Management Association of International
Manager Wealt
2 AIWM Entry blockades

3 fundamental principles professional Financial Planning Standards Boa

ethics

4 FPSB Professionalism and diligence

5 FPSB Code ofEthics 2 Integrity
ANSWER
I. Fillin the Blanks
1 a) Financial life
2 a) High-net-worth individuals
3 a) Long-term
4. a) Fiduciary
5. a) Larger investment distribution nodel
6. a) Brokerage firms
7. a) SEBÊ
8. a) Jurisdiction
9. a) Integrity
10. a) Fairness
11. a) Wealth management
12. d) Cash flow management
13. d) Cash flow management
II. True or False :
Al answer are Truel
III, Match the following
1.
2. 1
3. 4
4.
5. 5

IV. Match the following

1. 2
2. 1
3. 4
4. 3
5. 5