Top Wealth Management Firms

Top Wealth Management Firms

By Mark Kolakowski  Updated on September 2, 2022

When you're in the process of selecting the best wealth management firm to work for, some factors to narrow the field is to focus on the top firms in to look at profitability, wealth manager head count and outlook for the wealth management business shared by the management.

What Is a Wealth Management Firm?

Wealth management firms offer a wide range of financial and investment advisory services, typically, to high networth clients. Although the definition of the wealth market is a highly elastic one and it can vary by firm, a generally accepted variant includes clients with at least $1 million in financial assets, but many firms set the bar lower.

Here's a look at some of the big named wealth management firm, in no particular order.

UBS

In 2021, UBS generated roughly $4.8 billion in pre-tax profit from wealth management activities, representing a little over 50% of $9.48 billion pre-tax profit for the firm as a whole.1

While UBS is known for its aggressive cost and headcount-cutting, at the end of 2021, UBS had more than 9,300 financial and wealth advisors.2

Note:  In January 2022, UBS agreed to acquire digital wealth management company Wealthfront in a push to attract Gen Z and millennial wealth management client. The deal will add more than 470,000 clients with over $27 billion in assets to UBS.3

Bank of America

Many people know Bank of America as their friendly neighborhood Bank offering senior citizens free checking.  Actually, Bank of America is the parent company of Merrill Lynch, and it also includes its Bank of America Private Wealth Management divisions in its segment reporting for Global Wealth and Investment Management.

In 2021, the net income for Bank of America's global wealth management business, clocked nearly $4.33 billion. At the end of 2021, the company had a huge roster of more than 18,800 wealth advisors.4

Wells Fargo

Wells Fargo offers diverse wealth management services. For 2021, Wells Fargo's wealth and investment management business segment reported net income of over $2 billion, which represents around 9% of the the firm's total $21.5 billion net income for the year.5

To continue reading, please go to the original article here:

https://www.thebalancemoney.com/top-wealth-management-firms-1287460

What Does Financially Independent Mean?

What Does Financially Independent Mean?

Financial Independence Explained

By Miriam Caldwell  Updated on July 1, 2022

For most people, it is hard to reach financial independence without a job that allows them to be self-sufficient. But it's taking young people longer to reach this milestone than it did in the past. Forty years ago, most people were able to get a job that made them financially independent in their 20s. Today, according to a study from the Georgetown University Center on Education and the Workforce (CEW), it takes most young adults until their 30th birthday to get a job that allows them to support themselves fully.1

Even if you are still searching for a job that allows you to be economically self-sufficient, you can still take steps to work towards becoming financially independent. Learn more about financial independence and how you can take steps to get there more quickly.

Key Takeaways

To be financially independent, you must have enough income to cover your own bills and expenses.

Many young adults struggle to be financially independent of their parents due to the rising cost of living.

To work towards financial independence, begin saving to move out on your own, pay down debt, and manage your money with a budget.

Being financially independent also means planning for the future. Invest for retirement, build an emergency fund, and work toward other long-term financial goals.

What Does It Mean To Be Financially Independent?

If you are financially independent, you are responsible for your own expenses. You no longer rely on a parent, guardian, or another family member to provide money for you or cover your bills. You are paying your daily expenses and planning for the future, and you are able to meet your basic needs.

Reaching financial independence will take longer for some than for others. It will also depend on your own lifestyle and needs. For example, if you need to pay for college or graduate school, you may consider living at home for a while to save money. In this case, financial independence would be a few years away.

Note:  Financial independence can also be the point where you no longer need to work in order to cover your daily expenses. For most people, this won't occur until retirement.

When To Become Financially Independent

Working towards financial independence may mean different things depending on the cultural and social environment that you grew up in. Some families may expect adult children to fully support themselves beginning at age 18. For others, it may be expected that adult children will continue to live at home or receive assistance from their parents, even once they are working full-time.

To continue reading, please go to the original article here:

https://www.thebalancemoney.com/when-should-i-become-financially-independent-2385820

What Is Wealth Management?

What Is Wealth Management?

Definition & Examples of Wealth Management

By Tim Lemke  Updated on June 8, 2022

Wealth management is a kind of financial advisory service for accredited investors and others with high net worth. Wealth managers provide advice about investing, estate planning, taxes, and anything else that can help grow a client's wealth.  Understanding how wealth management works and how it compares to asset management can improve your financial picture.

Definition and Example of Wealth Management

People who have a high net worth may need more services than those offered by traditional financial advisors. Those with millions—perhaps even billions—of dollars may have complex portfolios, complicated tax situations, and other needs that are unlikely to apply to average investors.

Wealth managers often have access to a wider range of financial products and services. Clients pay a fee, but they receive strategies designed with their finances in mind. Services offered by wealth managers may include:

Investment management and advice, including retirement planning

Accounting and tax services

Review of health care and Social Security benefits

Charitable giving plans

Help with starting or selling a business

You likely don’t need a wealth manager if you don't have a high net worth. You may instead prefer to pay for a financial or investment advisor who can help you grow your money over time.

Note:  A financial advisor may be able to help you build your wealth. But a wealth manager can help you manage your money when you’ve already achieved a high net worth.

How Does Wealth Management Work?

Like most financial advisors, wealth managers earn their income by taking a percentage of the assets they manage. These fees can vary among firms and even across different types of accounts within the same firm. You can expect to see fees start around 1% of assets under management.

Breaking into wealth management is a good career move for financial advisors. A wealth manager would earn $50,000 in commissions in a year from one client if they were to charge a fee of just 0.50% to a client with $10 million in their portfolio. The more clients a wealth advisor has, the more those fees add up.

To continue reading, please go to the original article here:

https://www.thebalancemoney.com/wealth-management-4772460

What Is Wealth?

What Is Wealth?

By Amanda Page  Updated on December 30, 2021

Wealth is an individual’s or household’s net worth, which consists of assets such as money in savings and investment accounts minus debts like loans and mortgages.

Definition and Examples of Wealth

Wealth is often regarded as household net worth, which is the total value of assets minus any debt (“liabilities”). Therefore, if an individual or household owns an asset, then they have the potential for wealth, depending on the size of their debt, and their own perception of how much money it takes to be “wealthy.”

“You can value wealth in many different ways,” Matthew Ricks, a certified financial planner and president of Haystack Financial Planning, told The Balance by email. “For some, it’s being free of a mortgage. [Others] will say it takes owning $1 million. Some say multi-millions. It’s so individual.”

Ricks went on to note that income and wealth are not the same things; just because you earn a lot of money doesn’t mean you’re wealthy.

“Look at all the singers and athletes who go bankrupt,” Ricks said. “They made a lot and then spent even more.”

Note

There is subjectivity in how individuals define “wealth.” For instance, in a survey of 1,000 Americans, brokerage firm Charles Schwab learned that most believe an average of $1.9 million in personal net worth is necessary to be considered “wealthy” in 2021, but the previous year’s respondents said “wealthy” was $2.6 million in net worth.1

How Wealth Works

In most cases, wealth is inherited or self-made. To develop wealth, you must first define what wealth means to you. Once you’re aware of your own definitions, you can begin to gather information and make a plan to build wealth.

“You really have to think about what you want out of it,” Ricks said. “Do you want to work specific hours or make [a] specific [amount of] money? Do you want to own a successful business or have the freedom to buy time?”

To begin building wealth, it helps to calculate your net worth: Subtract your assets from your debt. You can then develop a wealth plan, which has key components that include saving, investing, paying down debt, and protecting the assets you accumulate.

To continue reading, please go to the original article here:

https://www.thebalancemoney.com/what-is-wealth-5203683

What Is a Decamillionaire?

What Is a Decamillionaire?

By Cassidy Horton  Updated on December 29, 2021

Anyone with a net worth of at least $10 million is considered a decamillionaire. Because the word “millionaire” is such a broad term, people often use “decamillionaire” instead to describe exactly how much wealth someone has.

Someone with a net worth of $10 million to $99.99 million is considered a decamillionaire. Because the word “millionaire” is such a broad term, people often use “decamillionaire” instead to describe exactly how much wealth someone has.

Here’s a closer look at what it means to be a decamillionaire and how it works.

Definition and Examples of a Decamillionaire

A decamillionaire is someone with $10 million to $99.99 million in net worth. The word is a combination of “deca” or “deka,” meaning “10” in Greek, and “millionaire,” meaning anyone with at least $1 million in net worth. Therefore, a decamillionaire is anyone with a net worth of at least $10 million.12

The term doesn’t just apply to those with $10 million in U.S. dollars, either. It refers to anyone who has a net worth of at least 10 million in any currency. So, if you have 10 million in British pounds or 10 million in euros, you’re also a decamillionaire.

How a Being a Decamillionaire Works

Oftentimes, using the word “millionaire” alone doesn’t paint an accurate picture of someone’s wealth. Do they have $1 million? $10 million? $100 million? There’s a sizable difference between those amounts. Therefore, people use terms like “decamillionaire” to further classify how much wealth someone has.

But decamillionaire isn’t the only subclassification used to describe the size of someone’s wealth. This chart breaks down other common categories people use:

Classification                      Net Worth

Millionaire                       At least $1 million

Pentamillionaire               At least $5 million

Decamillionaire                At least $10 million

Hectomillionaire              At least $100 million

Billionaire                       At least $1 billion

To continue reading, please go to the original article here:

https://www.thebalancemoney.com/what-is-a-decamillionaire-5208325

The Best Banks for Millionaires

The Best Banks for Millionaires

By The Balance Editors  Updated on November 30, 2022

Banks are essential for everybody, but millionaires and other high-net-worth (HNW) customers need to be especially choosy about the banks they choose. With more money at stake—and more money at the disposal of the bank—the experience is quite different for wealthy individuals.

Many HNW individuals choose to work with a private bank—either a stand-alone company or the private banking division of a larger banking corporation—that focuses on the management of wealth.

Account Features for HNW Customers

Banks stand to earn more off of their relationships with HNW clients, so they’re eager to reward you and compete for your business. As you shop for private banks and other companies you feel could meet your needs, compare these features.

Higher APY: With a significant savings account balance, you should be eligible to earn more—a higher annual percentage yield (APY)—on your deposits. Evaluate how much banks pay at different levels and shop around. But you may find that, even as a millionaire, online banks are the best place for idle cash.1

Dedicated customer service: Most financial institutions have specialized departments for HNW customers, and it pays to work with those teams. You get access to experienced individuals who have excellent customer service skills and are more empowered to solve problems for high-priority clients.2

Free services: Although you can afford to pay $35 for a wire transfer, it’s nice to get things for free. With a sizable account balance, you should automatically enjoy no monthly fees, free cashier’s checks, free stop payment requests, a safety deposit box, and more. ATM rebates are more or less standard for HNW customers.3

Higher payment limits: Standard bank rules may be inconvenient for millionaire customers, who often need to move large sums. But private banking arrangements typically allow for much larger debit card purchases, higher ATM withdrawal limits, and generous ACH transfers.4

Better borrowing: Look for lower interest rates on loans, but don’t expect free money. Still, banks are willing to waive origination fees and other closing costs, as well as move your application through underwriting quickly.5 They might even make exceptions when you don’t fit the standard profile.

Cash management accounts: Some firms that traditionally served brokerage needs now want your banking business. Cash management accounts, with competitive interest rates and ATM rebates, are ideal for millionaires who prefer to manage their finances themselves.

Plus, cash management accounts can spread funds among multiple banks to provide more than $250,000 of FDIC insurance in a single account. For example, the Fidelity Cash Management account uses bank partnerships to place up to $1,250,000 in FDIC-insured accounts.6

If you choose to use a cash management account, read all of the details to ensure all of your money is protected.

Setting Your Priorities

 To continue reading, please go to the original article here:

https://www.thebalancemoney.com/top-accounts-used-by-millionaires-4165695

What Is a Millionaire?

What Is a Millionaire?

Millionaires Explained  By Paula Pant

Definition: In the U.S., a millionaire is someone whose wealth (or net worth) is valued at $1 million or more.

Definition and Examples of Millionaires

Today, the most common definition of a millionaire is a person or a married couple whose net worth is greater than $1 million. Under this classification, the number of millionaires around the world has multiplied over the past century.

Note:  Despite inflation and subsequently weaker buying power, the U.S. dollar is the international measure for qualifying millionaires.

For example, suppose you have assets totaling $1,400,000 ($1.4 million) and liabilities totaling $200,000. In that case, your net worth would be $1.2 million, meaning that you fit the definition of a millionaire.

How Being a Millionaire Works

When considering whether someone is a millionaire, in most cases, you consider their net worth. According to a Spectrem Group Market Insights Report, there were 11.8 million Americans with a net worth of at least $1 million in 2019.1

A person's net worth is like a summary of the total financial value of their balance sheet. This concept represents a person's financial assets minus their liabilities. In other words, net worth is what they own minus what they owe.

However, net worth includes the appraised value of all non-liquid assets, which are harder to liquidate (or sell) if needed. For this reason, there is some debate about whether the term "millionaire" should apply to people with total assets over $1 million or only to those with liquid assets in excess of $1 million.

Note:  Categorizing millionaires is not straightforward when factoring in non-liquid assets. The price of consumer goods rises and falls; in an economic slump, it's unrealistic for assets like real estate and antiques to fetch full price on the market.

Where the Term "Millionaire" Originates

The term "millionaire" comes from French and was first used in 1786. It was used to describe the men who became rich off of speculative investments in North America. By the standards of the 18th century, a millionaire was someone who had amassed an unimaginable amount of wealth.2

In the wake of more than a century of inflation, $1 million hasn't retained the exceptional buying power it had in 1900. In 2022 dollars, it would be equivalent to about $34.8 million.3

A Millionaire's Profile

By looking at a person's balance sheet and considering their assets and debts, we can figure out whether they have a net worth of at least $1 million. Suppose that John Doe has the following assets:

To continue reading, please go to the original article here:

https://www.thebalancemoney.com/what-is-a-millionaire-453762

It’s Okay to Be in Debt, Just Not Okay to Stay in Debt

It’s Okay to Be in Debt, Just Not Okay to Stay in Debt

Ever since college, I always thought I was good with money. At least, that’s what I’d tell myself in my 20s. At the age of 25, I was completely debt-free! Yet, we somehow managed to accumulate nearly $200,000 in debt by age 30.

Most purchases were relatively normal in this day and age: a house, student loans, newer cars, a wedding, a condo at the lake. Oh wait, a lake house is not typical, but it happened. While getting into debt was not ideal, I don’t regret any of it, and thankfully we had the financial means to dig out. I know not everyone is as fortunate. Regardless, this is our story. 

Going Nearly $200,000 in Debt

After graduating from college with a master’s degree at the age of 25, I started life with a clean slate. I had a little bit of savings in the bank that I could scrape together over the years. My “college fund” was a total of $6,000, and since I never had to use it, my parents gave it to me after graduating.

In addition, I had managed to save a few thousand dollars more over the years from my job, waiting tables and bartending in college. So at age 25, I had no debt and a decent amount of money to start my life.

If I could do it all over again, there are things I would do differently. Regardless, by my 30th birthday, we had managed to accumulate nearly $200,000 in debt. How did this happen?

Our road to accumulating this debt is not all that uncommon. Many life events can take place soon after graduating from college.

First was the newer car “needed” since I had a better-paying job and could afford it. That, of course, came with a five-figure loan.

Next was planning for a wedding. This included purchasing an engagement ring and paying for our wedding. In total, this cost us somewhere between $20,000 and $25,000. We mostly paid with savings, but it still set us back financially.

Along the way, Mrs. FP decided to go back to school to get her teaching certificate. Unfortunately, we stared at almost $50,000 in student loan debt once she graduated.

Then, of course, we needed to live somewhere. We purchased my grandparents’ old house shortly after my grandmother passed away. The house was purchased below market value though we still ended up with a $100,000 mortgage and a home that needed to be completely renovated. We are still spending money renovating this house ten years later.

And last but not least, we ended up buying a lake house with family. This also included buying a wave runner and chipping in to buy a boat. My parents paid for the down payment, and for nearly ten years, we’ve split the monthly payments along with my two other brothers.

Shortly after agreeing to buy the lake house, we found ourselves in a bank lobby taking out a home equity loan because two bathrooms were leaking into our basement.

More debt.

And yes, we went in on the lake house purchase already nearly $200,000 in debt. I’m a terrible personal finance blogger, I know.

Drowning in Debt

At that moment in the bank lobby back in 2011, we decided enough was enough. It was time to face the fact that we were slowly going down a path of debt accumulation that would be difficult to unwind if we continued pressing forward. Next would have been an even bigger house and nicer cars. But, instead, we decided that day to face our debt and begin paying it off.

Here’s the thing: besides the lake house purchase, all of those events are relatively normal in today’s society. Maybe not in the financial independence community, though definitely in this day and age. I’m not saying it’s right or wrong, but that’s reality.

To continue reading, please go to the original article here:

https://financialpilgrimage.com/okay-to-be-in-debt/

Why Housing is More Important Than the Stock Market

Why Housing is More Important Than the Stock Market

Posted May 27, 2022 by Ben Carlson

I know a lot of finance people want to blame the Fed for everything these days but central banks aren’t the sole culprit of the inflationary environment we find ourselves in.

The pandemic seriously screwed up global supply chains and the labor market. Governments around the world spent trillions of dollars to keep the global economy afloat while we put things on ice for a while. Consumers began spending money en masse on goods because they stopped spending on experiences and had nothing else to do.

And yes, the Federal Reserve was extremely loose with monetary policy to keep the credit markets functioning and bring the unemployment rate down.

Even though it wasn’t completely their fault, it seems like the Fed is now the only one trying to clean up the inflationary mess by tightening monetary policy.

They’re doing this in two ways:

(1) By raising interest rates and unwinding quantitative easing (bond purchases).

(2) Signalling to the financial markets they may have to throw the economy into a recession to slow inflation.

The Fed cannot fix supply chains but they can raise rates high enough that it cools demand.

Former New York Fed chair Bill Dudley says one way to do this is through the wealth effect:

In contrast to many other countries, the U.S. economy doesn’t respond directly to the level of short-term interest rates. Most home borrowers aren’t affected, because they have long-term, fixed-rate mortgages. And, again in contrast to many other countries, many U.S. households do hold a significant amount of their wealth in equities. As a result, they’re sensitive to financial conditions: Equity prices influence how wealthy they feel, and how willing they are to spend rather than save.

Effectively, Dudley is saying the Fed needs to raise interest rates high enough that stock market investors don’t feel as wealthy, and thus, stop spending as much money.

I get what he’s saying.

They don’t tell you this in the textbooks, but so much of what goes on in the economy and markets is based more on faith, trust and psychology rather than data, fundamentals and statistics.

It would make sense that households who see their net worth plummeting would start to reconsider their financial standing and spending habits.

But I think Dudley overestimates the importance of stock market wealth on American households.

For years we’ve been hearing about wealth inequality and for good reason. The top 10% of households own the majority of financial assets:

The top 10% holds 70% of the net worth in this country while the bottom 90% accounts for 75% of the debt.

There is a reason for this disparity. The top 10% owns most of the financial assets while the bottom 90% has more of their net worth tied up in real estate.

To continue reading, please go to the original article here:

https://awealthofcommonsense.com/2022/05/why-housing-is-more-important-than-the-stock-market/

What Caused the Great Depression?

What Caused the Great Depression?

December 2, 2014 by Ben Carlson

The price of oil is down nearly 40% in five months, a swift fall in one of the most important and visible commodities in the world. After seeing such a crash in price, investors and pundits are quick to trot out the specific reasons for the decline.

I’ve heard many people this week give the singular reason that oil has fallen so hard so fast. While it makes for a better narrative after the fact, markets rarely move because of a single variable or data point. That would be far too easy.  Usually it’s a confluence of events that gets magnified by leveraged investors and a herd mentality as everyone heads for the exits at once.

Even after the fact it’s difficult to know exactly why the markets behave the way they do. Complex adaptive systems don’t follow a set script.

The biggest case in point of all-time is the Great Depression and the stock market crash of 1929-1932. Consider the stat sheet from this colossal downturn:

The unemployment rate hit nearly 25%

GDP contracted almost 27% (for comparison purposes, it was down only 4.3% in the most recent crisis)

The stock market fell in excess of 85%

This period has been studied by scholars, economists and historians for decades, yet we still can’t find a good answer to the question: Did the stock market crash cause the Great Depression or did the Great Depression cause the stock market crash?

Here’s a list of the most heavily cited reasons:

There was a huge increase in consumer debt in the 1920s as technological innovation advanced at a rapid pace. For the first time ever, people could buy radios, fridges, cars or clothes on credit. It’s estimated that by the end of the 1920s over one-eighth of all retail sales were made on credit.

Margin debt in the stock market was out of control. Speculators had basically taken over the market with an excessive use of leverage. Almost 20% of the total market of listed stocks was purchased on margin loans by 1929.

The Federal Reserve’s overly restrictive monetary policies (Ben Bernanke studied these policies and wasn’t going to repeat their mistakes during the Great Recession).

Declining commodity prices from overproduction due to World War I, which led to tariffs and currency devaluations across the globe.

To continue reading, please go to the original article here:

https://awealthofcommonsense.com/2014/12/caused-great-depresssion/

Do I Have To Pay a Relative's Taxes After They Die?

Do I Have To Pay a Relative's Taxes After They Die?

Lee Huffman  Sat, December 17, 2022

When a loved one passes away, it can be an emotional experience. Unfortunately, handling the deceased’s finances can add to this stress. While most people know that you need to file a final tax return for the deceased, most people don’t know how to handle income received after the person has died. This income is known as “income in respect of a decedent” (IRD), and it has its own special rules. Consider working with a financial advisor as you prepare an estate plan or implement a loved one’s estate plan.

What Is Income in Respect of a Decedent?

Income in respect of a decedent (IRD) is the income received after someone dies but not included in the person’s final tax return. When beneficiaries take over a deceased person’s finances, the situation can be complicated. This is especially true if they owned a business, had many types of bank and investment accounts, or were unorganized.

Examples of IRD include:

Uncollected salary, wages, bonuses, commissions and vacation or sick pay

Distributions from deferred compensation

Stock options exercised

Taxable distributions from retirement accounts

Interest on bank accounts

Dividends and capital gains from investments

Accounts receivable paid to a small business owned by the decedent (cash-basis only)

This is a good reminder that people should have a detailed list of financial accounts and investments for beneficiaries to refer to. This will give them a to-do list to notify them of your death and to avoid any accounts getting lost in the shuffle.

How Is IRD Taxed?

IRD is income that would have been included in the deceased’s tax returns had they not passed away. If this income was not included in the final tax return, then it is considered IRD. Where IRD is reported depends on who received the income. If paid to the estate, it should be included on the fiduciary return. When IRD is paid directly to a beneficiary, then the beneficiary should include it in their tax return.

To continue reading, please go to the original article here:

https://news.yahoo.com/pay-relatives-taxes-die-130012175.html