A guide to the three pillars of wealth management

Wealth manager

Wealth management is not a service that everyone will need to take advantage of. As can be inferred from the name, it exists primarily to help individuals who have a considerable income and savings to manage these and achieve their goals for the future. However, it can also be useful to businesses that enjoy healthy turnovers and want to plan for expansion in the future.

To understand whether a wealth manager is something that you are likely to need, it would help to know what the main areas are that a professional of that sort covers. Therefore, in this article we will be looking at the three main pillars of wealth management.


The first of these pillars is protection. This means safeguarding the existing financial assets that you have managed to build up from the things that can threaten to wipe them out. The protection offered by a wealth manager can be broken down into two parts:

  • Inflation protection
  • Cash deposit protection

Inflation protection

Having an accumulation of wealth in hard cash rather than investments sometimes feels safer and more secure to people, because they can see and feel it. However, cash assets of that sort are actually far more vulnerable to things like inflation. This can eat away at the value of your money, unless you are growing it at a rate to match or better inflation levels.

Most wealth managers will advise against keeping too much of your wealth in cash for that exact reason, especially when rates of interest are not very high. They can also help people with serious sums available for investment to secure better rates of interest.

Cash deposit protection

This is about ensuring that the money you deposit is safe. In the UK, the Financial Services Regulation Scheme only offers protection on cash deposits of £85,000 or less per institution. That means cash may have to be deposited in a number of accounts to provide the highest possible protection.

A wealth manager can help with this and make sure that deposits are only placed with properly regulated institutions.


Having put measures in place to protect your financial assets, the next stage of wealth management is identifying strategies for growing them. By choosing to explore wealth management in Chester or wherever you are based, you will ensure that these strategies maximise the potential returns, while keeping the risks to the minimum.


A degree of risk is necessary when investing, however, and wealth managers will guide you away from hoarding cash assets towards the rewards offered by investments. One common strategy is to invest in equities; these are quite high risk but can produce major returns. They regularly provide 5.7% returns on 1.5% cash investments, so it is easy to see why people choose them.

An investment balance

Wealth management is about spreading investments across several asset classes, with varying degrees of risk. Therefore, investments in equities will usually be balanced by lower risk classes like bonds. What the exact balance between high and low risk investments ends up being depends on the risk tolerance of each individual, and is something to be discussed with your wealth manager.

Tax mitigation

The last of the three main pillars of wealth management is finding ways of reducing the amount of tax that you are liable to pay on your assets. Keeping taxes to a minimum will be essential to ensuring that you have enough money to accomplish your goals.


There are investments that can help to reduce tax burdens and that are backed by the UK government. These include things like putting your money into small businesses through Enterprise Investment Schemes, which enable you to offset Capital Gains and Income Tax liabilities. Other options for tax reduction include self-invested personal pensions (SIPPs) and inflation protected annuities (IPAs).

Inheritance Tax is another liability that has the potential to eat into any estate you have and that you are hoping to leave to your family. However, it is possible to cut the amount of this that will be owed after your death by converting some of your assets to commercial properties that are covered by Business Property Relief. This is a strategy that a wealth manager will almost certainly suggest.

While it is true that investments like these that are designed to cut tax liabilities can carry a higher degree of risk than standard ones, they also offer the potential for greater returns in addition to their tax reduction advantages. This is something that will be covered when your advisor talks to you about your risk tolerance levels at an early stage in the professional relationship.

Now you know what the three primary pillars of wealth management are. Speak to a professional in your local area for more information about each of them.

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