The concept of wealth management has undergone significant changes in recent years. What was once a straightforward business of handling investment portfolios for the rich has transformed into a labyrinthine industry brimming with jargon, buzzwords, and marketing terms. As wealth management services increasingly target the ultra-wealthy — households worth $5 million or more — the market has become oversaturated with language designed more to sell services than to explain them. This has created a challenge for both investors and advisors alike, as individuals with high net worth struggle to navigate a sector that is supposed to serve them.
In response to this issue, a new initiative has emerged to clarify the often murky waters of wealth terminology. The Ultra High Net Worth Institute, a nonprofit organization that focuses on enhancing services for wealthy families and investors, has introduced a crowdsourced list of commonly used terms in wealth management, aptly named the "Wealthesaurus." The idea behind this glossary is to offer clear, precise definitions for the most commonly misused or misunderstood terms in the industry, thus creating a standard that both clients and professionals can rely on. By continually updating the list with input from wealth managers and clients, the Wealthesaurus aims to demystify the often opaque language of wealth management and help investors make more informed decisions.
The growing wealth of the top 1% has become a focal point in global financial conversations. According to Cerulli Associates, in 2024, households worth $5 million or more controlled a staggering $49 trillion in financial wealth, representing more than half of the nation’s total. With this level of wealth in play, the competition for clients has become intense. Private banks, registered investment advisors (RIAs), private equity firms, and boutique advisory firms are all vying for the business of the ultra-wealthy. As a result, a vast array of terms has emerged to describe services, many of which are laden with inflated language meant to convey exclusivity, sophistication, and personalization. Unfortunately, this branding has often led to a lack of clarity, leaving clients confused about the true meaning of these terms and the services being offered.
One of the most contentious terms in the wealth management industry is “family office services.” Historically, a family office referred to a private advisory firm that managed the wealth of a single ultra-wealthy family, taking care of everything from investments to tax planning to legacy management. Today, however, the term has been so diluted that it is often used by firms that may only offer a narrow range of services or who lack the experience to properly manage the complexities of ultra-wealthy families' needs. The Wealthesaurus clarifies that the term “family office services” should only apply to firms that offer a comprehensive suite of services with a focus on long-term, multigenerational wealth planning. Unfortunately, many firms throw around the term to attract high-net-worth individuals, without providing the level of expertise or breadth of services that would justify the label.
Another term that has been increasingly misused is “multifamily office.” Traditionally, a multifamily office referred to a single family office that expanded its services to a small number of other families, offering the same high-touch, bespoke services that were once reserved for one family only. Today, however, the term has become a catch-all for any firm that manages the wealth of more than one family. According to the Wealthesaurus, the term has become so watered down that some industry professionals argue it should no longer be used at all. A true multifamily office, according to the Wealthesaurus, must meet specific criteria, such as serving at least 10 complex, multigenerational families, with a median net worth of at least $30 million, and offering a broad range of services, all delivered without conflicts of interest. The rise of the term’s overuse has led to a situation where clients cannot always be sure whether they are receiving the bespoke services associated with a true multifamily office or whether they are simply being marketed to by a firm that uses the label as a sales tactic.
The term “assets under advisement” (AUA) has also come under scrutiny, particularly for its frequent misuse in an attempt to inflate a firm’s apparent assets. AUM, or assets under management, refers to the total value of assets that a firm actively manages for clients. In contrast, AUA refers to the assets a firm advises on, whether or not they manage them directly. The distinction between AUM and AUA is subtle but significant. However, many firms use the terms interchangeably, or worse, they report AUM and AUA together without making it clear to clients which category the assets fall into. According to the Wealthesaurus, it is important for investors to understand this difference and to ask wealth managers for clarity on how they calculate AUA and AUM. If a firm combines the two figures without proper explanation, it is a red flag that requires further investigation.
Similarly, the term “fiduciary” has also been the subject of much debate in the wealth management industry. A fiduciary is an individual or firm that is legally obligated to act in the best interests of their clients, as opposed to other firms that may be motivated by commissions or proprietary products. However, many firms use the term without actually adhering to the fiduciary standard. The Wealthesaurus offers a strict definition, emphasizing that a fiduciary must always place the client’s interests above their own. Wealth managers who claim to be fiduciaries but who have conflicts of interest or who fail to disclose fees and commissions are, in essence, misleading their clients. Investors should be wary of firms that use the fiduciary label without demonstrating their commitment to the standard.
One of the broader concerns that has led to the creation of the Wealthesaurus is the growing complexity of wealth management services and the increasing sophistication of the clientele. As wealth management firms target the ultra-wealthy, the products and services they offer have become more complex. Families with vast wealth often have multiple sources of income, intricate investment portfolios, global tax issues, and long-term planning needs. These complexities require a deep understanding of not just finance but also law, taxes, and estate planning. Unfortunately, many firms promise expertise they do not possess, making it even more difficult for investors to discern which firm can actually meet their needs.
The introduction of the Wealthesaurus is a step toward reducing the noise and hype in the wealth management industry. By establishing clear definitions and standards for commonly used terms, the initiative hopes to help wealthy individuals and families better navigate the increasingly crowded field of wealth management services. The goal is not just to improve transparency but also to empower clients to make more informed decisions. As wealth management becomes more about building relationships and providing long-term, personalized advice, having a common language to discuss services will be essential.
In addition to defining terms like “family office,” “multifamily office,” and “assets under advisement,” the Wealthesaurus also aims to address the issue of inflated marketing language in the industry. Many firms use terms like “holistic advice” or “bespoke solutions” to suggest that they offer tailored, comprehensive services. However, these terms are often vague and lacking in substance. The Wealthesaurus seeks to hold firms accountable by providing clear guidelines on what these terms truly mean and how clients should expect them to be applied.
As wealth management firms continue to compete for the business of the ultra-wealthy, it is likely that the industry will see more efforts to create transparency and clarity in how services are described and delivered. The Wealthesaurus represents one such effort to bring about change. By establishing a common set of definitions and standards, it aims to create a more level playing field for both clients and professionals. Investors, for their part, will be better equipped to identify firms that offer genuine expertise and high-quality services, free from the clutter of marketing buzzwords.
The explosion of wealth at the top of the economic ladder has fueled a growing demand for sophisticated wealth management services. With trillions of dollars in financial assets controlled by a small percentage of the population, the competition for clients has never been fiercer. This has given rise to a marketing arms race in the wealth management industry, with firms constantly creating new terms and buzzwords to attract high-net-worth individuals. The unfortunate result has been an overabundance of confusing terminology that serves to obscure rather than clarify the services being offered.
The Wealthesaurus initiative represents a significant step toward restoring transparency and credibility to the wealth management sector. By offering clear, agreed-upon definitions for common terms, it helps to strip away the jargon and allows for more meaningful conversations between wealth managers and their clients. This, in turn, will enable investors to make more informed decisions, leading to better financial outcomes and greater trust in the industry as a whole.
Ultimately, the Wealthesaurus is a response to an industry that has become bloated with inflated language and misleading claims. It is a recognition that, for the ultra-wealthy and those who serve them, clarity is paramount. Wealth management should be about more than just selling services or inflating the perceived value of assets. It should be about offering expert advice, personalized solutions, and the ability to navigate the complex world of wealth in a way that is transparent, ethical, and most of all, in the best interest of the client. With the Wealthesaurus as a guide, both investors and wealth managers can take a step toward making the world of wealth management more straightforward, understandable, and trustworthy.