What is Asset Management?

You have probably heard of assets. These are valuable things you own that could be in the form of money, property, jewelry or even business investments like stocks, mutual funds, and hedge funds.

Now, asset management is the management of an investor’s capital. The essential task of managing, arranging, and analyzing assets like stocks, real estate, and private equity is usually done by asset management companies.

The asset management company allows for the professional and efficient execution of an investment mandate. They will handle the client’s stock investments or master limited partnerships as experts in the financial market. Asset management is usually for wealthy people or institutions.

Wealthy clients open accounts in asset management firms. Cash is usually deposited within these and the asset management company manages the cash inflow as well as the overall portfolio for the clients.

An asset management firm will look at the client’s risks, income needs, liquidity, and taxes and decide a portfolio strategy. Management firms can manage wealth and assets over generations often helping with inheritance transactions.

An asset management company will charge the client investment fees according to the performance-agreement or annual minimum fees ranging from ten thousand to a million dollars.

Some asset management companies also cater to less wealthy clients and manage mutual, index or exchange-traded funds for the clients. These are all grouped together in one portfolio and the asset management company offers financial advice and planning strategies to the client.

However, clients with accounts that have a balance in the thousands will probably not have access to most asset management company services since they will be unable to the minimum fee.

This is why certain companies in the asset management industry provide specified services to middle-income clients. These companies include the asset management company called Vanguard.

Middle-income clients are usually found with simpler plans of investment. Wealthy clients, on the other hand, often need complicated financial procedures and instruments like asset placement. This is why asset management for them requires smarter strategies to manage their assets and ensure an income or profit.

Middle-income clients often invest to ensure financial securities in the period after retirement or financial security for their heirs and dependents.

This is why most middle-income clients will go for options like mutual funds that pool together resources from the clients and invest it for growth potential so that more income is generated in a few decades.