Wealth management refers to the gamut of services such as investments, taxation and accounting related consultancy, and retirement planning, among others. It is an umbrella term that has to do anything with helping a client optimize wealth.

A wealth management service can provide a client with any financial service or product available, based on their needs. These products or services could be mutual funds, alternative investment funds, portfolio management services, bonds and tailor-made products involving different asset classes. Wealth management services also provide a range of financial products such as unit-linked investment plans (ULIPs), which offer the dual benefit of insurance and investment.

Wealth Management

(Source:ET*)

Tax planning and helping an investor save taxes is an integral aspect of wealth management. If you are an individual looking to save tax, your wealth manager would be your go-to person. The wealth management service may suggest that you invest in equity-linked mutual fund schemes or ELSS, for example.

Equity-linked schemes (ELSS) are also called tax saving mutual funds. They need not just be used for tax savings but also for wealth generation, because of the exposure to equity. ELSS are covered under Section 80 C of the IT Act. This provision allows for tax deductions of up to Rs 1.5 lakh annually resulting in tax savings.

ULIPs, as noted before, are also products that help an investor save on taxes. The payments made toward premium are eligible for deduction under Sec 80 C of the IT Act. Also, returns gained once the policy matures are eligible for deduction under the IT Act as part of Sec 10 D. This is a double benefit you can claim if you invest in a ULIP. A wealth manager will ensure that your mutual funds gain proper exposure to assets while also offering you adequate cover.

Wealth Management

Wealth management solutions offer the right tax-saving financial products that suit your needs and your financial goals. Are you planning for retirement or investing in property? Are you celebrating a gala wedding event? Based on these requirements, wealth managers manage your finances.

Investment options

Typically, wealth management is aimed at high net worth individuals (HNIs) who would like a one-stop-shop for all their financial needs. If you are an HNI, you may be interested in investment solutions such as portfolio management services or PMS, or alternative investment funds (AIF).

PMS is an investment option wherein your wealth manager tracks your investments in equity, commodities, cash or bonds. The wealth management service does all the research on behalf of the client and invests funds in assets that provide optimal tax savings.

Alternative investment funds are investment options wherein funds from HNIs and ultra HNIs are pooled privately for investment in options such as hedge funds, real estate funds or private equity. Taxation norms are complex, and if you as an individual HNI wish to manage your taxes, chances are your calculations will be prone to errors. A professional wealth management service knows the nitty-gritty of taxation, especially with reference to the categories these funds come under. There are category I funds such as angel funds, category II funds such as private equity funds or fund of funds, and category III funds such as hedge funds. The taxation norms can vary for different categories, and only wealth management services can help you with your investments.

Tax management

HNIs may often have interests overseas and may have to grapple with taxes that vary from one region to another. Wealth management services take into account these interests and with their knowledge on various taxation schemes and methods, will help clients save tax.

With Budget 2020, a new tax regime is in place, where taxes are lower but exemptions are done away with. Investors have still been given the option of switching between old and new tax regimes, on the basis of which is favourable for them. The intricacies of tax slabs and which regime works best for investors across income levels are best managed by a wealth management service.

Whether you are an HNI or not, whether you are into mutual funds or other investment options, it is ideal that you seek out professional counsel via Tata Capital for your wealth management needs. You will not just benefit from investment solutions but also from saving considerably on taxes, which is another way to manage your wealth.

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