Whether it’s managing an international pension fund or administering multiple real-estate properties, it’s safe to say that many of us are fairly unfamiliar with the deeper nuances of asset management.
In fact, if you’ve only recently come into wealth or have only just begun considering how you might be able to grow the value of your financial possessions, you might be unfamiliar with what capital asset management is.
To help you understand if you should seek assistance to grow your personal wealth, and if working with an asset management company is right for your needs, here’s everything you need to know about the process.
What is asset management?
In layman’s terms, having assets under management refers to the day-to-day running of what’s known as a wealth portfolio, which is often carried out by an outside firm or qualified individual.
The goal of this form of wealth management is to boost the financial capital of your asset portfolio over time by acquiring, maintaining, and trading assets that have the potential to grow in value, ultimately providing you with a greater return on your investment.
All of this is also done under the express guidance of maintaining an acceptable level of risk for the client’s capital. Said level of risk is dictated by the client and acts as a guide on what sort of investment actions can and can’t be taken with the portfolio.
Typical areas that are usually covered by capital asset management can include, but are not limited to:
- Real estate
- Mutual funds
Technically speaking, this process can be carried out by yourself, especially if you want total control over your assets and finances. However, this can be a time-consuming process, especially if you aren’t knowledgeable in this area of finance. It can often be much easier to seek the assistance of a financial advisor, like those at Blacktower.
How does asset management work
As the name implies, assets under management are either handled by individual advisors or asset management firms. Regardless of which you choose to work with, once you decide to seek asset management services, you’ll be assigned a representative to work with you.
Once in contact with you, the first thing your new portfolio manager will do is meet with you and go through your asset portfolio to garner an understanding of your long-term financial goals and what you want to get out of their services.
After this initial discussion, your portfolio manager will then work with you to create an investment plan unique to your needs, with the end goal of maximising the value of your assets over time at a level of risk acceptable to you. They may also advise you on what level or risk to avoid, depending on the contents of your assets.
From here, your manager will use this knowledge to make investments on your behalf. This is typically done through in-depth research into current or future market trends, reviewing corporate finances, and other relevant sources of information. They will then continually monitor and tweak your portfolio in order to diversify its contents with higher-value assets.
What are the different types of asset management?
As with many areas involving finance, asset management services fall into a variety of categories. Each of these offer differing levels of service, and will monitor and tailor your investments in relation to independent degrees of fiduciary responsibility – whether or not they’re bound by law to make decisions for their client’s portfolio based on good faith.
One of the most common types of global asset management options, opting for the aid of a financial advisor will give you access to a professional adviser who works within a specific financial area related to your needs.
An advisor of this kind will actively recommend the types of investments you should make with your assets for the best return on your investments. They can also buy and sell your capital, assuming you agree to this in the contract.
However, the level of fiduciary duty financial advisors have can vary between each person and firm, so it’s best to check this with them beforehand.
Much like a financial advisor, an investment broker can be both a single individual or a member of one the of various asset management firms available in your area. They can perform many of the same duties as a financial advisor but tend to focus on stocks, bonds, and mutual funds.
Like financial advisors, investment brokers often don’t have a set fiduciary duty, so you should be sure of where your desired investment broker stands on this matter before you agree to any advisory assistance.
Registered investment advisors
Asset managers that fall under registered investment advisors belong to firms that can advise clients on risk before managing their portfolio options. Where they differ from other advisors, however, is in their legal obligations.
As the name implies, a registered investment advisor is highly regulated, almost always registered under the appropriate local government body, ensuring that they take actions that are in line with your fund’s best interests.
Highly affordable but also rather uncommon, this type of asset management involves the use of a computer algorithm to monitor and rebalance your portfolio, selling and buying according to the goals and risk tolerances you’ve previously laid out.
These advisors are rising in prevalence thanks to their ease of maintenance and are often recommended for those with smaller financial investments.
Is asset management right for you?
Although opting for an asset management service can be a useful tool, it’s not for everyone.
In many cases, the costs associated with asset management often mean it’s only feasible for those with a sizeable asset group and money. There is also often a minimum investment level to consider on top of this, which can be a hurdle for many looking for financial assistance who don’t meet the initial requirements.
Costs for this kind of service can also vary greatly, ranging anywhere from brokerage and additional fees associated with each transaction to an annual percentage cost based on the total value of your fund.
In some cases, it may actually be easier for you to use alternative investment options, such as ISAs, to facilitate your capital growth goals, though there is no harm in speaking with an advisor beforehand to understand your options.
At the end of the day, whether or not the use of asset management services is right for you will come down to how much you’re willing to invest in your portfolio, and what you want to get out of your capital in the long run.
This communication is for informational purposes only, based on our understanding of current legislation and practices which is subject to change and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.
Talk to us today
For more information on Asset management Contact Us Today
"*" indicates required fields