Wealth Terminology Guide: Defusing Investment Jargon
Decoding the Language of Wealth: Introducing the Wealthesaurus
Navigating the world of wealth management can feel like learning a new language. Jargon abounds, definitions differ, and even seemingly straightforward terms can hold multiple meanings. To address this confusion, the Ultra High Net worth Institute has launched the Wealthesaurus, a publicly available glossary designed to bring clarity to the industry and empower both clients and professionals.
The project stemmed from an internal challenge at the Institute, founded in 2019 by veteran advisor Steve Prostano to provide unbiased guidance to wealthy families.While developing the Integrated Family Wealth Management Initiative, a team of industry leaders found themselves repeatedly debating the definitions of core concepts.
“We would use a term and someone would say ‘um, actually I think it’s this,'” explains Institute representative, Grubman. “And someone else would say ‘I remember from 15 years ago it was defined like that.’ It was amazing the differences people had, even around words like family enterprise.”
This realization sparked the creation of an internal glossary, which quickly evolved into the Wealthesaurus.The resource, playfully branded with a dinosaur mascot, aims to standardize language and foster better understanding across the wealth management landscape.
Addressing Key Industry Ambiguities
One prime example of the need for clarity lies in the reporting of assets. The Wealthesaurus highlights inconsistencies in how firms calculate and present Assets Under Advisement (AUA) and Assets Under Management (AUM). “Some firms include AUM in their calculation of AUA without making it clear they are doing so, while others report AUM and AUA separately,” the glossary notes. To combat this, the Wealthesaurus recommends firms transparently explain their AUA calculation methods.
But the Wealthesaurus isn’t just about numbers. It tackles the imprecise use of terms like “high net worth” and “ultra high net worth.” While traditionally defined as $5 million to $30 million and $30 million or more respectively,the glossary acknowledges a shifting landscape. “With inflation and the notable expansion of global wealth as 2000, more firms are considering the modern threshold to the top UHNW level to be $100 million.”
Beyond Definitions: A Bridge Between Disciplines
The Wealthesaurus deliberately avoids defining complex financial products readily available elsewhere – no explainers on GRATS, FLiPs, or SMAs, for example. Rather, it focuses on foundational terms frequently enough obscured by industry jargon, providing links to resources like the Charles Schwab Investing Glossary, Investopedia, and the SEC Glossary for product-specific data.
“We looked for terms that were vital to the field, or where the other definitions out there were so full of jargon,” Grubman says. “Wading through the definition of assets under advisement on the SEC website is a nightmare, for instance. So we wanted to create this for clients.”
The resource’s value extends beyond individual understanding. As wealth management increasingly integrates with other professions – including trust and estate planning, accounting, real estate, philanthropy, and even concierge medical services - the Wealthesaurus serves as a common language, bridging the gap between disciplines.
Early engagement with the Wealthesaurus has been promising, with users spending an average of over seven minutes exploring the site and clicking between terms.The Institute welcomes ongoing contributions from wealth management experts and clients, aiming to continually expand and refine the glossary.
The Wealthesaurus isn’t just a dictionary; it’s a step towards a more transparent and accessible wealth management industry.