New standardized definitions of family wealth advisory terms have been developed by the UHNW Institute and, so far, the Wealthesaurus appears to have drawn a favorable response from the sector. We examine how the glossary was developed and what difference it can make to the industry.

Nearly two years in the making, The UHNW Institute’s groundbreaking glossary of standardized definitions of terms used by wealth managers working with ultra-high net worth clients has made its public debut on the organization’s website.

The “Wealthesaurus” provides standardized definitions of common and specialized family wealth advising industry terms, supported by an explanation, cross-references to related terms and citations when available. 

“We ran into language ambiguity and jargon on projects for terms like ‘family enterprise’ and ‘holistic services,’” said Jim Grubman (pictured), an UHNW Institute board member and principal at Family Wealth Consulting who helped lead the glossary initiative. “We realized there was no glossary for this part of the industry and decided that if it doesn’t exist, we should make it ourselves.”

Jim Grubman

The glossary became part of the Institute’s Integrated Wealth Management Initiative and currently defines approximately 100 terms, including asset-based fees, discretionary accounts, enterprise governance, nonfinancial capital and retainer fee.

Grubman and other Institute members worked with librarian Tara Kehoe to create what he described as a “dynamic” site that offered clear, objective and unbiased definitions for terms that may have become suffused with ambiguity, marketing jargon and cliches.

Familiar but fuzzy phrases
For example, the glossary defines the ubiquitous phrase ‘client-centric services’ as “service delivery and related activities that prioritize the needs of the client above those of the advisor or firm providing the services.”

It also notes that while “placing the client first” is a common tagline many wealth advisors and firms advertise to their prospects and clients, in truth it can be “difficult to verify specific actions that reflect a truly client-centered approach.”

Or, as Grubman put it, “Who would say they have a non-client centered approach?”

The Wealthesaurus also takes aim at cliches like “holistic services,” which it describes as “a well-intentioned term with no clear standards or guidelines that prove whether a firm truly utilizes a comprehensive approach in working with the client. It is not a guarantee that a firm will be delivering truly integrated services across multiple domains.” 

For general terms like “integration,” the Wealthesaurus tries to “set some criteria,” Grubman said, relying heavily on the UHNW Institute’s Ten Domains of Family Wealth.

Definition debate
Other terms proved contentious.

While  â€œmulti-family office” is widely used  (or abused) by advisors, the glossary asserts that “it has not yet been precisely defined with accepted standards. Some industry observers believe the term has no established basis and should never be used.”

Similarly, while the Wealthesaurus defines the threshold for “ultra-high net worth” to be $30 million, it notes that some in the industry designate $50 million as the threshold. What’s more, with inflation and the significant expansion of global wealth since 2000, the glossary states that “more firms are considering the modern threshold to the top UHNW level to be $100 million, or the centimillionaire level.” 

One of the biggest challenges of creating the new glossary was keeping it brief and accessible, said Kehoe. Other glossaries were “bloated and way too long,” she said. Unlike Wikipedia, the Wealthesaurus is not crowdsourced but rather relies on input from industry professionals, although it does welcome contributions. 

Related glossaries include Investopedia, Charles Schwab Investing Glossary, IRS Data Book Glossary of Terms and US Security and Exchange Commission Glossary.

Industry reaction
Initial reaction to the glossary has been positive.

“I love the Wealthesaurus concept,” said Jon Jones, CEO of Seatle-based wealth manager Brighton Jones. “The layout is straightforward, and I believe incorporating common vernacular and understanding will be really helpful.”

The wealth management and ultra-high net worth advisor industry needs to “agree on definitions and speak the same language,” said Jonathan Bergman, president of New York-based TAG Associates and an advisory board member of the UHNW Institute. “I am pleased that this is shared publicly so clients can understand our industry jargon.”

Industry consultant Mark Tibergien, the former CEO of Pershing Advisor Solutions, applauded standardizing language “we all use.” Tibergien would like to see the glossary expanded to include “a true distinction made between a registered rep at a broker-dealer who is paid on a grid even when the client is paying fees for sum, a bank-based advisor, the role of a trust officer/advisor and an RIA or multi-family office advisor.”

Shared definitions “benefit clients, advisors, and the broader UHNW community,” said Rachel Hyman, president of The Family Wealth Alliance, who noted that organization published its MFO Standards in 2006 and continues to refine it as the industry evolves.

“We welcome and applaud other organizations contributing to the growing body of knowledge that supports exceptional advice and service in family wealth,” Hyman said.