14 June 2021
There is often some confusion around the terms asset and investment management, with the titles sometimes used interchangeably. Ultimately asset managers and investment managers share the same goal of making money for their clients, but how they do this may be a little different. While there is some overlap between the two activities, there can also be some key differences.
Here we’ll explore asset and investment management, what they are and how they differ.
An asset manager will work with clients and handle their investments. This can include a wide spectrum of assets from real estate to stocks and exchange-traded funds. They carefully steward current investments, looking at their performance and future prospects as well as seeking out new options.
Asset and investment management will involve both these activities, but asset management is perhaps a more precisely defined term than investment management.
Asset managers will be detail-oriented professionals, usually with a depth of experience in markets. Their key role is to maximise returns from client investment and restructure them when necessary to increase profitability. They will assess risk, monitor performance and continually look for new opportunities that promise investment returns.
As well as evaluating market factors and identifying market opportunities, they will also prepare reports and communicate to clients about their investments. While an asset manager may make investment decisions, asset management tends to focus on the custodial aspects of assets.
Investment management might be considered a more generic term than asset management. An investment manager can be a financial professional who uses a variety of tools, knowledge and experience to ensure that their clients receive a profitable return on their investment. They may have a particular specialisation, such as stocks, for example.
Investment management requires strong analytical skills and the ability to sift, sort and assess a wide range of different information sources. They will be able to form this information into a coherent picture that allows them to offer asset and investment management advice to their clients.
By gathering and analysing information, they will clarify goals for a client’s portfolio and determine which investments to buy. They will look at broader economic factors and prepare reports for clients, changing investments if the chosen options underperform. There may be less emphasis on the custodial side of assets and more focus on generating returns for the clients.
Asset and investment management services should be bespoke and focused on the requirements of the clients. Asset and investment managers should take the time to quantify the client’s capacity and willingness to live with volatility. They should then carefully develop an investment and wealth management strategy that is regularly revisited and revised over time.
By combining both asset and investment management approaches, they should ensure the safe custody of assets alongside a strategy to grow those assets.
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