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This version of the article first appeared on CNBC’s Inside Wealth Newsletter. This is Robert Frank, our weekly guide to Net-Worth Investor and Consumer. Sign up to receive future editions directly in your inbox.
The leading advisory group in the wealth management industry has launched a crowdsourcing list of wealth terminology that they hope to reduce confusion and marketing hype.
The Ultra High Net Worth Institute, a nonprofit focused on improving services to wealthy families and investors, recently unveiled its “Wealthesaurus.” This list will be continuously updated and expanded based on opinions from wealthy investors and advisors, and aims to define new languages for wealth management and create accepted standards for communication with clients.
“There are a lot of garbage terms and a lot of marketing terms being tossed,” says Jim Grubman, content and curriculum chair at the Ultra High Networking Ten Institute and founder of Family Wealth Consulting. “The motivation for this is to counter some of the BS on the ground.”
The need for reliable wealth Wikipedia follows an explosion of gimmicks, false labels and misleading hype in the business of managing the fate of wealthy people.
In 2024, more than $5 million households managed an estimated $49 trillion in financial assets, according to Cerulli Associates. As assets grow at the fastest speed at the top of wealth ladders, competition for ultra-rich investors and family offices has escalated among private banks, wirehouses, registered investment advisors, private equity companies and boutiques. That growth has resulted in a barrage of bulging brand languages.
Terminology such as “family office services,” “holistic advice,” and “advice-based assets” are used indiscriminately, making it more difficult for clients to navigate an industry that is already inexplicable for non-financial professionals than ever before.
One of the most terrible violations is the term “multi-family office.” Traditionally, multi-family offices are single family offices that have been expanded to serve a small number of external families and families. Today, dozens of Rias, boutique managers, and even large advisory firms call themselves multi-family offices, trading the exclusiveness and bespoke service that true family offices imply.
“Some industry observers believe the term has no established basis and should never be used,” according to a Weltesaurus entry in the Multifamily Office. “Most experts simply recognize that the term has been recognized over the past 30 years, even if it has insufficient validity or consistency in its use.”
To comply with the Wealthesaurus definition, a multi-family office requires a specific service, service delivery (no conflict of interest), and four specific attributes from experience, from specific clients (at least 10 complex multi-generational families with a median net worth of at least $30 million).
Another controversial term is “assets under advice.” Companies often seem to throw asset terms and manage more clients’ money than they actually do. Some companies use “Managed Assets (AUM)” while others say “Assets based on Advice (AUA)” and “Advertise assets under Control (AUADMIN).” Clients rarely know the difference.
Werthesaurus offers a very specific definition of each, and the focus of the assets under advice is a company that serves as trustees (terms of office in another discussion). Clients say they should ask specifically how to divide assets under management and advice.
“Some companies include AUA in their AUA calculations and report AUM and AUA separately, while not clarifying what they are doing,” according to Wealthesaurus. “If these amounts are valued, companies should be asked to explain how to calculate AUA to address this issue.”
Grubman said the Werthesaurus idea began with an unexpected problem at the Ultra High Power Laboratory. The institute was founded in 2019 by Steve Prostano, a long-standing advice to wealthy families and private business owners. The institute counts numerous top wealth management companies, advisory companies and expert leaders on its board, and also aims to promote industry best practices and standards.
Two years ago, the institute began developing what is called the Integrated Family Wealth Management Initiative, and in recent years it has looked at drastic changes in the industry and ways to better serve clients. The group’s discussions fell into question. They often couldn’t agree with certain words.
“We’ll use the terminology and someone will say, ‘Um, I think it’s actually this,'” Grubman said. “And someone else will say, ‘I remember it was defined like that for 15 years ago.’ The differences people had, centered around words like Family Enterprises, were amazing. ”
The Institute’s library managers Grubman and Tara Kehoe began compiling group members and internal glossary and definitions of crowdsourcing. Over time, the list grew and decided to create a public version to better support its clients and businesses.
They considered calling it Weltypedia, but the name arrived at Weltesaurus and added a dinosaur mascot. Grubman said the Institute welcomes the terms and definitions proposed by other asset management experts and clients in the hopes of expanding its use. Kehoe said the engagement was high. New users spend an average of more than seven minutes on recently launched sites.
“They’re clicking from term to term and actually using resources,” Kehoe says.
This site does not aim to be a comprehensive guide to all asset management terms. There are no other products that will turn the heads of glatt, or flips and signs from the real estate planning world, or SMAS and PPVA accountants in investments, or wealthy investors. Grubman said the lab doesn’t want to include products or conditions that investors can easily search on the web. For these types of product terminology, the Weltesaurus website contains links to various online investment guides, including Charles Schwab’s Investment Glossary, Investopedia, and SEC Glossary.
“We looked for a place where terms that were important to the field or other definitions there were full of jargon,” Grubman said. “Adhering to the definition of assets based on the advice of the SEC website, for example, is a nightmare. So I wanted to create this for my clients.”
As businesses that advise wealthy families become increasingly reduced across industries, from trusts and real estate planners to accountants, real estate advisors, philanthropy consultants, aviation and fleet experts, and even concierge doctors and other professionals, Wertesaurus can become a bridge of disciplinary action.
In Werthesaurus, there is even a defined term for “ultra-high source.” This is a phrase used throughout the world of luxury and banking, with little context.
Wealthesaurus says the most common definition of “High Net Worth” is a client between $5 million and $30 million. “Ultra High Net Worth” usually means more than $30 million. However, he warned that “due to inflation since 2000 and the substantial expansion of global wealth, more companies consider it to be the latest UHNW level at $100 million.”
