Do you need an asset manager? An investment manager? It can be confusing when you are searching out someone to help manage your money and are looking for the most appropriate professional to help you achieve your financial goals. At the end of the day, asset managers and investment managers work towards the same goal of making money for their clients but how they do this is a little different. Asset managers usually work with affluent individuals or companies that have very large amounts of money to invest. Investment managers may work with any individual or company interested in investing. Asset managers often focus on a specific type of asset investment, like real estate for example, and create a long-term plan to ensure their client’s investments appreciate in value. Investment managers may supervise daily transactions related to a client’s investments or they can focus on specific types of investments, such as stocks or bonds.
Asset managers work with wealthy clients and handle their investments in things such as real estate or business ventures. In addition to finding investment options for clients they also work to find ways to save clients money or maximize their profits on existing investments. This requires they be detail-oriented and capable of making effective decisions.
Investment managers may fill multiple roles. They can specialize in stocks and provide insight to their company’s research department about stock options for clients or they may focus on which investments to include in a client’s portfolio.
Why is investment management important?
Your investment manager is there to manage your investment portfolio. They will devise and implement an investment strategy to meet your goals, and then use that strategy to decide how to divide your portfolio among stocks, bonds and other investments. The manager buys and sells those investments for you as needed and also monitors your portfolio’s overall performance to ensure it stays on track with your goals in mind.
You may also find an investment manager that is also a financial planner. They can provide holistic financial advice for a variety of areas like cash-flow management, taxes, insurance and estate planning. Another option is a wealth manager, who often works with high-net-worth clients to manage their financial planning and investment management needs, as well as coordinate the services of other professionals, such as lawyers and accountants.
Investment management is important because it is very common to end up with an assortment of investment accounts — for example, you may have several IRAs, multiple 401(k)s from former jobs, or that brokerage account you opened on a whim. Investment management can organize your financial situation by consolidating accounts from different firms under one roof, allowing you to simplify and execute a cohesive investment plan.
When choosing an investment management firm, know that most require you to set up an investment account with them or at a brokerage they use. They will help you transfer your money from accounts at other firms, including retirement plan assets, IRA’s and any other financial account you are looking to streamline into your investment plan.
However, even if all of your investments are under one account, investment management is important if:
- You want a second option about your investment decisions. You are not a financial expert and working with a professional can increase your investment confidence.
- You need someone to keep an eye on your portfolio and rebalance assets when the mix drifts away from your finical goals.
- You have complex financial issues, including things like family inheritance distributions, retirement-income planning, tax strategies or future legacy planning for your children and grandchildren.
- You need an professional to help manage other financial needs. This may include things like cash-flow planning, insurance decisions, portfolio distributions or debt management solutions.
Your manager’s investment decisions are based on many factors, but they will start with your savings goal and your desired time frame. Savings goals can include things like emergency fund building, retirement, education, or large purchases like a home or cares. You will provide them answers and insight that helps them assess your risk tolerance, or your ability and desire to endure swings in investment returns and how you are prepared to handle stock market fluctuations. Your manager’s investment strategy is also informed by historical performance, market performance tax efficiency and investment fees – these are all taken into account when looking at your portfolio as a whole.
Managing investments is an ongoing process, and that includes the continuous monitoring, and assessing, of your investments as well as your investment managers performance. You should expect results, not just strategies. Your investment manager should encourage regular conversation to discuss performances of their investments, how they compare to market averages and your expectations, and if changes need to be made to the plan.