Asset management is managing investments on behalf of clients to achieve their financial goals. It involves making investment decisions, monitoring portfolios, and reporting and advising clients. “asset management” encompasses many types of financial services and products.
Asset management firms help individuals and institutions invest their money wisely. They employ professionals like financial analysts, portfolio managers, and wealth advisors to provide specialized services to clients. The most common types of asset management include:
The goal across all types of asset management is to use expertise and access to grow and preserve client assets over time. “Our job as asset managers is to find the right investments to match each client’s financial situation and goals,” says Michael Smith, a portfolio manager at Asset Management Co.
Asset management involves several key steps:
This first step is critical – asset managers must develop a deep understanding of each client’s investment objectives, risk tolerance, time horizon, liquidity needs, tax considerations, and other unique circumstances. It is achieved through detailed conversations and profiling questionnaires.
A written investment policy statement or IPS codifies the client’s investment objectives and constraints. This guiding document establishes the investment philosophy, asset allocation, risk tolerance levels, and other parameters for managing the client’s portfolio.
Portfolio managers construct customized portfolios designed to maximize returns within the framework of the IPS. It involves research, financial modelling, and experience to select the mix of asset classes, individual securities, investment vehicles, and strategies.
Diversification is key – portfolios are built using varied assets like stocks, bonds, real estate, commodities, and cash to balance risk versus return.
Asset managers continuously monitor portfolios, asset classes, and individual holdings to ensure proper investment strategy implementation. When allocations drift from targets due to market movements, periodic rebalancing is done by selling overweight assets and buying those underweight.
Frequent reporting gives clients transparent visibility into investment performance, holdings, transactions, fees, taxes, and other portfolio details. Ongoing discussions keep clients informed and aware of progress towards their goals.
There are many advantages to hiring professional asset managers:
Asset managers use various philosophies, styles, and strategies:
The asset management industry worldwide manages over $100 trillion in assets. Assets under management at the 25 largest global asset managers:
Largest sovereign wealth funds like the Norway Government Pension Fund Global ($1.3 trillion) and large endowments like Harvard ($53 billion) are also major players.
In the U.S., assets are shifting from actively managed funds to passive index funds and ETFs. The “Big Three” passive managers – BlackRock, Vanguard, and State Street Global Advisors – collectively have over $20 trillion under management. Robo-advisors like Betterment and Wealthfront are disrupting wealth management.
Several trends are transforming asset management:
The four primary types are investment management, wealth management, retirement planning, and institutional asset management. Each provides specialized services to different types of individual and institutional investors.
Asset managers typically have undergraduate degrees in finance or economics, MBAs, and/or specialized designations like the Chartered Financial Analyst (CFA) credential. Portfolio managers require experience and a track record of investment results.
Asset managers charge fees based on a percentage of assets under management, typically 1-2%. Wealth managers may also charge fixed or hourly fees. There are often minimum account sizes.
Asset management helps individuals and institutions invest capital wisely to meet financial objectives. Skilled asset managers provide expertise, diversification, discipline, investment access, and ongoing service that adds client value. Though a multi-trillion dollar industry, asset management remains focused on understanding unique client needs and goals above all else. With increasing reliance on sophisticated strategies and new technologies, the asset management industry continues to evolve – but the fundamental mission of guiding investors remains unchanged.
Up until working with Casey, we had only had poor to mediocre experiences outsourcing work to agencies. Casey & the team at CJ&CO are the exception to the rule.
Communication was beyond great, his understanding of our vision was phenomenal, and instead of needing babysitting like the other agencies we worked with, he was not only completely dependable but also gave us sound suggestions on how to get better results, at the risk of us not needing him for the initial job we requested (absolute gem).
This has truly been the first time we worked with someone outside of our business that quickly grasped our vision, and that I could completely forget about and would still deliver above expectations.
I honestly can’t wait to work in many more projects together!
Disclaimer
*The information this blog provides is for general informational purposes only and is not intended as financial or professional advice. The information may not reflect current developments and may be changed or updated without notice. Any opinions expressed on this blog are the author’s own and do not necessarily reflect the views of the author’s employer or any other organization. You should not act or rely on any information contained in this blog without first seeking the advice of a professional. No representation or warranty, express or implied, is made as to the accuracy or completeness of the information contained in this blog. The author and affiliated parties assume no liability for any errors or omissions.