{"id":87,"date":"2020-01-06T13:37:03","date_gmt":"2020-01-06T13:37:03","guid":{"rendered":"https:\/\/www.invest19.com\/blog\/?p=87"},"modified":"2020-01-09T11:47:14","modified_gmt":"2020-01-09T11:47:14","slug":"difference-between-portfolio-management-and-wealth-management","status":"publish","type":"post","link":"https:\/\/www.invest19.com\/blog\/difference-between-portfolio-management-and-wealth-management\/","title":{"rendered":"Difference between Portfolio Management and Wealth Management"},"content":{"rendered":"
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People\noften end up confusing between portfolio management and wealth\nmanagement, although both of these are a very different concept.\nPortfolio management is more about seeking decisions on the\nprogression of creating and evaluating the assets in the portfolio of\nthe investor while wealth management looks at the entire spectrum of\npersonal finance on an individual level. Even though both of these\nare branches of the management, these tend to work on different\nlevels. \n<\/p>\n\n\n\n

We\nhere look at how portfolio management and wealth management work\naround and find the differences between them. Read along.<\/p>\n\n\n\n

What\nis Portfolio Management?<\/h3><\/p>\n\n\n\n

A\nportfolio is said to be a group of financial assets including stocks,\ncommodities, bonds, cash equivalents, mutual funds, exchange-traded\nfunds and more. Portfolio management looks at the aspect of making\ndecisions regarding these investments and their appropriate mix. It\nlooks at the asset allocation and balancing the risk accordingly\nagainst the estimated performance. It determines the strengths,\nweaknesses, threats, and opportunities regarding the assets and their\nperformance and makes an optimum choice so as to maximize the returns\nfrom the pool of assets. \n<\/p>\n\n\n\n

\nExample of Portfolio Management \n<\/h3>\n\n\n\n

\nFor say an investor has a fund of Rs 1 lacs to\nstart and he intends to create a diversified portfolio to help\nleverage higher returns and lower risk metrics. A portfolio manager\nwill distribute the funds across different asset options like equity,\nmutual funds, real estate, fixed deposits, bonds, gold and more. The\nbifurcation will be done by the portfolio manager to maximize the\nreturns while creating a basis for lower-risk pattern.<\/p>\n\n\n\n

Understanding Portfolio Management <\/h3><\/p>\n\n\n\n

\nIt is quite common to see portfolio management\nand wealth management in the same breadth although they both are not\nthe same. Portfolio management looks at the aspect of creating and\nmanaging the investment of an individual. Portfolio management is\nconducted by professional portfolio managers who manage the portfolio\non behalf of others. Although plenty of individuals also build their\nportfolio and manage it on their own. Portfolio management is guided\nby the goal to maximize the return on the investments bought by the\nindividual whilst managing the risk to the lowest possible of\nexposure. \n<\/p>\n\n\n\n

\nGenerally, portfolio management can be either\npassive or active in nature. Passive management refers to the aspect\nof setting up a strategy and keeping it on for the long run. It is\nalso known as indexing or index investing. Active management refers\nto the situation where a single manager or a team of managers manage\nthe fund on behalf of the client through investment decisions and\nresearch. \n<\/p>\n\n\n\n

What is Wealth Management?<\/h3><\/p>\n\n\n\n

Wealth\nmanagement is a broader term than portfolio management and looks at\nthe aspect of managing and enhancing the overall financial situation\nof the individual or an organization in a bid to help protect the\nfinancial wealth. It is commonly used across business, trade and even\non an individual level. It comprises all financial aspects like\nday-to-day financial planning, accounting and tax planning,\nretirement planning, estate planning and much more. If you look at\nit, portfolio management is one of the sets of services that are\noffered under the wealth management. \n<\/p>\n\n\n\n

\nExample of Wealth Management \n<\/h3><\/p>\n\n\n\n

\nFor say there\u2019s an affluent individual with a\nwealth that needs to be managed. The individual seeks greater\nfinancial oversight and active management so as to mitigate the\nfinancial obligations and plan accordingly. Wealth managers tend to\noversee the financial oversight and address the need for wealth\nmanagement for the individual. \n<\/p>\n\n\n\n

Understanding Wealth Management<\/h3>\n\n\n\n

\nWealth management is more about integrating the\npieces and advice regarding the financial aspect of an individual. It\nprovides a holistic approach where a manager coordinates with their\nservices so as to manage their money and plan accordingly so as to\nmeet the present and futuristic financial needs and requirements\nposed by the clientele.<\/p>\n\n\n\n

\nA wealth manager forms a designated plan so as\nto increase the client\u2019s wealth based on the financial situation,\ngoals and level of risk tolerance. The manager develops the plan and\ncontinues to update and review the plans so as to rebalance the\nfinancial portfolio whenever required. This is usually appropriate\nfor wealthy individuals who have an array of diverse needs and needs\nto balance between them. \n<\/p>\n\n\n\n

A short synopsis<\/h3>\n\n\n\n

\nIn\na nutshell if we were to look at portfolio management and wealth\nmanagement, there are various aspects that differentiates them.\nHere\u2019s a tabular representation of the differences between\nportfolio management and wealth management to shed light to the\nmatter. \n<\/p>\n\n\n\n

\n\t\t\tParticulars<\/strong>\n\t\t<\/td>\n\t\t\tPortfolio\n\t\t\tManagement<\/strong>\n\t\t<\/td>\n\t\t\tWealth\n\t\t\tManagement <\/strong>\n\t\t\t\n\t\t<\/td><\/tr>
\n\t\t\tDefinition<\/strong>\n\t\t<\/td>\n\t\t\tManaging\n\t\t\ta client\u2019s portfolio of assets \n\t\t\t\n\t\t<\/td>\n\t\t\tManaging\n\t\t\tclient\u2019s overall financial aspect\n\t\t<\/td><\/tr>
\n\t\t\tFocus\n\t\t\tArea<\/strong>\n\t\t<\/td>\n\t\t\tInvestment\n\t\t\toptions\n\t\t<\/td>\n\t\t\tFinancial\n\t\t\tplanning\n\t\t<\/td><\/tr>
\n\t\t\tFunctions<\/strong>\n\t\t<\/td>\n\t\t\tManaging\n\t\t\tthe assets like stocks, bonds, mutual funds, ETF\u2019s commodities\n\t\t\tand more to yield higher returns.\n\t\t<\/td>\n\t\t\tManaging\n\t\t\tclient\u2019s tax planning, accounting planning, retirement planning,\n\t\t\testate planning and more. \n\t\t\t\n\t\t<\/td><\/tr>
\n\t\t\tDesignated\n\t\t\tperson<\/strong>\n\t\t<\/td>\n\t\t\tPortfolio\n\t\t\tmanagers\n\t\t<\/td>\n\t\t\tWealth\n\t\t\tManagers \n\t\t\t\n\t\t<\/td><\/tr>
\n\t\t\tResponsibility\n\t\t\t<\/strong>\n\t\t\t\n\t\t<\/td>\n\t\t\tManage\n\t\t\tassets accordingly to yield high returns whilst lowering the risk\n\t\t\tmetrics.\n\t\t<\/td>\n\t\t\tCarrying\n\t\t\tout fiduciary responsibilities to maximize the client\u2019s benefit\n\t\t\tand manage wealth accordingly. \n\t\t\t\n\t\t<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Final Notes<\/h3>\n\n\n\n

\nPortfolio\nmanagement and wealth management may seem similar to a commoner but\nthey are quite a different phenomenon. Portfolio management is\ninclined towards creating an investment plan which helps to generate\nthe maximum of returns while lowering the risk metrics while wealth\nmanagement looks at the aspect of providing a financial overview and\nplanning to manage the wealth accordingly. While both the portfolio\nmanager and wealth manager may look forth to providing guidance in\nfinancial growth and assistance, the roles are vividly different for\neach of them. You can seek the services of the desired professional\nbased on your requirements. Although there may be instances too where\nyou may need services of both of them at once. \n<\/p>\n

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People often end up confusing between portfolio management and wealth management, although both of these are a very different concept. Portfolio management is more about […] Read More<\/a><\/span><\/p>\n","protected":false},"author":1,"featured_media":130,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[15,14],"class_list":["post-87","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-wealth-management","tag-portfolio-management","tag-wealth-management"],"_links":{"self":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/87","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/comments?post=87"}],"version-history":[{"count":4,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/87\/revisions"}],"predecessor-version":[{"id":131,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/87\/revisions\/131"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media\/130"}],"wp:attachment":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media?parent=87"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/categories?post=87"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/tags?post=87"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}