New Wealth Terminology Guide Aims to Clarify Industry Jargon
A new initiative from the Ultra High Net Worth Institute aims to clarify the often confusing language of the wealth management industry. The organization has launched the Wealthesaurus, a crowdsourced glossary featuring over 80 terms commonly used in wealth management. This resource is designed to reduce confusion and combat the marketing hype prevalent in the sector.
The Wealthesaurus was unveiled to address the growing need for clear definitions in an industry where terms are frequently misused. According to Cerulli Associates, households with a net worth of $5 million or more controlled an estimated $49 trillion in financial wealth in 2024. As the wealth management landscape becomes increasingly competitive, many firms have adopted inflated terminology, making it difficult for clients to navigate their options.
Addressing Confusion in Wealth Management Language
Jim Grubman, who serves as the content and curriculum chair at the Ultra High Net Worth Institute, stated, “There are a lot of garbage terms, a lot of marketing terms being tossed around.” He noted that the goal of the Wealthesaurus is to “counteract some of the BS in the field.” This comes in response to the proliferation of misleading jargon that can obscure the services offered to wealthy clients.
Terms like “family office services” and “holistic advice” are often used interchangeably, adding to the confusion. One particularly contentious term is “multifamily office.” Traditionally, this refers to a single family office that expands to serve several outside families. However, many firms now use the term to describe services that do not meet this definition, diluting its significance.
The Wealthesaurus helps clarify these terms by providing specific definitions and standards. For instance, to qualify as a multifamily office, a firm should serve at least ten complex, multigenerational families with a median net worth of $30 million, and operate without conflicts of interest.
Clarifying Misleading Financial Terminology
Another term that often causes confusion is “assets under advisement.” Financial firms may use this term to give the impression of managing more money than they actually do. The Wealthesaurus distinguishes between “assets under management” (AUM) and “assets under advisement” (AUA), providing precise definitions to help clients understand what is included in these figures.
Grubman explained that this initiative originated from discussions at the Institute, which was founded in 2019 by Steve Prostano. He believed clients needed unbiased assistance in understanding the complexities of wealth management. The Institute aims to promote best practices within the industry and has gathered leaders from various top firms to contribute to this effort.
As the wealth management landscape evolves, the Wealthesaurus will continue to expand. It welcomes suggestions for new terms and definitions from both clients and industry professionals. Since its launch, engagement has been strong, with users spending an average of over seven minutes exploring the resource.
While the Wealthesaurus does not aim to be a comprehensive guide to every term in wealth management, it focuses on significant terms that are often misdefined in other resources. For example, it offers a clear definition of “ultra high net worth,” typically referring to individuals with a net worth of $30 million or more, and notes that some firms now consider $100 million as the threshold for this designation.
By providing clarity in wealth management terminology, the Wealthesaurus sets out to empower clients, enabling them to make more informed decisions in an increasingly complex financial landscape.
