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Assets Management

Asset Management

What is Asset Management?

Asset management is the practice of acquiring, holding, and selling investments that can increase your value to increase your overall wealth over time.

The asset manager provides this service to others. They may also be called portfolio managers or financial advisors. Many work independently, while others work for investment banks or other financial institutions.

Understanding Wealth Management

Asset management has the dual purpose of increasing value while reducing risk. In other words, the customer’s tolerance for risk is the first question. Pensioners living off portfolio income or pension fund managers who oversee pension funds avoid (or should avoid) risks. Younger or more enterprising people may want to make high-risk investments.

Most of us fall somewhere in between, and property managers want to know exactly where their clients are.

The asset manager’s role is to determine what investments to make, or avoid, to realise the client’s financial goals within the limits of the client’s risk tolerance. The investments may include stocks, bonds, real estate, commodities, alternative investments, and mutual funds, among the better-known choices.

The asset manager is expected to conduct rigorous research using both macro and microanalytical tools. This includes statistical analysis of prevailing market trends, reviews of corporate financial documents, and anything else that would aid in achieving the stated goal of client asset appreciation.



Types of Asset Managers

There are several different types of asset managers, distinguished by the type of asset and level of service that they provide.

Each type of asset manager has a different level of responsibility to the client, so it is important to understand a manager’s obligations before deciding to invest.

  • Registered Investment Advisers

A registered investment adviser (RIA) is a firm that advises clients on securities trades or even manages their portfolios. RIAs are closely regulated and are required to register with the SEC if they manage more than $100 million in assets.

  • Investment Broker

A broker is an individual or firm that acts as an intermediary for their clients, buying stocks and securities and providing custody over customer assets. Brokers generally do not have a fiduciary duty to their clients, so it is always important to thoroughly research before buying.

  • Financial Advisor

A financial advisor is a professional who can recommend investments to their clients, or buy and sell securities on their behalf. Financial advisors may or may not have a fiduciary duty to their clients, so it is always important to ask first. Many financial advisors specialize in a specific area, such as tax law or estate planning.

  • Robo-Advisor

The most affordable type of investment manager isn’t a person at all. A robo-advisor is a computer algorithm that automatically monitors and rebalances an investor’s portfolio accordingly, selling and buying investments according to programmed goals and risk tolerances.

Because there is no human intervention, robo-advisors are significantly less expensive than personalized investment services.