What is Asset Management?

Asset management is a service in which a qualified individual or firm professionally manages investments on behalf of an individual or institution. An asset manager oversees a client’s financial assets which can include:

  • Stocks
  • Bonds
  • Real Estate
  • Other Securities

The main objective an asset management company is to maximize returns while minimizing risk for the client. It is the asset manager’s responsibility to develop investment strategies to reach their clients’ specific financial objectives with their risk tolerance in mind.

Ongoing tasks include monitoring and adjusting client portfolios to achieve the best performance possible. Asset managers may also provide financial advice, regularly conduct research to stay up to date on trends, and execute trades on behalf of their clients.

How does asset management help investors?

Asset management helps all types of investors at scale. Here are some of the ongoing tasks of this profession:

1. Custom Goal-Based Planning

Asset managers do a lot of incredible work, and the first step is to find out what their client’s goals are, followed by advising what type of investments their clients need to achieve said goals. Asset managers will ask a variety of questions to develop customized investment strategies.

Whether someone wants to generate cash flow for a more comfortable retirement or expand a real estate investment portfolio, an asset management company can play a pivotal role in achieving these unique goals.

2. Portfolio Diversification

Asset managers help investors diversify their portfolios, which minimizes risk. If one asset type is in declining or flat, others may be growing, which prevents the entire portfolio from tanking. By spreading investments across various asset classes, such as stocks, bonds, real estate, and alternative investments, and asset manager expertly protects their client’s investments for long-term gain.

To make the best portfolio for the client, asset managers thoroughly research and analyze different investment opportunities to offer the best potential returns relative to their risk.

3. Risk Management

Asset managers can customize portfolios with different financial products and asset types based on the client’s investment decisions and risk tolerance.

The asset manager will assess an investors’ risk tolerance and create a plan that aligns with their risk preferences. Thereafter, the asset manager should be continually implementing risk management strategies to protect investors’ capital during market downturns.

By continuously monitoring market conditions with asset management software, these pros can stay on top of economic trends and asset performance. Therefore, they can make timely adjustments to portfolios to capitalize on emerging opportunities or soften risks for other segments of the portfolio.

4. Tax Help

Asset managers are well versed-in tax law, so they are able to recommend tax-efficient investment strategies to minimize an investors’ tax liabilities. Strategies will differ based on the client’s assets, but overall, the asset manager can find ways for the client to get the most possible out of tax time, offering strategies to write off all possible deductions and much more!

5. Financial Guidance

Investors can get valuable financial education and guidance to make informed decisions about their assets. Through this service, individuals and institutions can get insights into market trends, investment strategies, and how economic events can impact their portfolios.

Overall, asset management provides investors with well-rounded professional expertise, disciplined investment processes, and personalized advice to help them build and manage wealth effectively over time.

Who can help with asset management?

Several professionals and entities can partake in professional asset management. Therefore, investors can find the right place for their needs, whether it’s a brokerage for real estate needs or a broader asset management service to monitor a variety of asset classes at once.

1. Real Estate Investment Managers

If your portfolio contains predominantly real estate investments, then a real estate investment manager is probably right for you. They specialize in managing real estate assets including commercial properties, residential properties, and infrastructure projects.

They can handle property acquisition, leasing, property management at scale, and portfolio optimization for real estate investors. Real estate, just like other asset classes, is dynamic and performs differently in select markets, so having an expert that specializes in this asset class is ideal for a real estate investor.

2. Wealth Managers/Financial Advisors

These pros can give personalized financial advice and manage investment portfolios based on clients’ financial goals, risk tolerance, and time expectations. They offer services such as asset allocation, portfolio diversification, and ongoing monitoring and rebalancing.

3. Asset Management Firms

Asset management firms specialize in managing investment portfolios through offering a range of services like investment advisory, portfolio management, and financial planning.

4. Private or Investment Banks

Private banking institutions typically help high-net-worth individuals with comprehensive financial services, including asset management, estate planning, tax advisory, and wealth preservation strategies.

Investment banks can also provide asset management for institutional clients, corporations, and government entities. They may also offer investment advisory, asset allocation, and risk management services.

5. Trust Companies

Trust companies can manage assets that are held in trust for individuals, families, and charitable organizations. They make sure that assets are wisely invested and managed according to the terms of the trust agreement.

6. Family Offices

Family offices are private wealth management firms that serve high-net-worth entities. They can provide a broad range of financial services that include asset management. In addition to that, they can also help with estate planning, tax optimization, charity planning, and lifestyle management.

7. Robo-Advisors

Let’s not forget the most affordable option, though it isn’t the best in class. Robo-Advisors are online platforms that offer low-cost investment solutions that include portfolio rebalancing, and tax-loss harvesting based on a client’s needs. This route is not as comprehensive as working with a firm, bank, or brokerage, but it can give general guidance based on current trends.

These options can help individuals, families, and institutions effectively manage their assets to achieve their financial goals and objectives.

How is asset management different from real estate investment management?

Asset management and real estate investment management are closely related terms, but they have some distinct differences. Since these two terms are often confused with one another, it’s important to define them.

  • Asset management is the broad process of managing different asset types that include financial assets (stocks, cash, bonds), real estate, infrastructure, and other tangible assets. Asset management is more diverse than managing real estate alone, but it can include managing real estate investments.
  • Real estate investment management focuses solely on the process of managing the full cycle of real estate investment needs. Since this service deals with physical properties, it involves additional tasks unique to real property, including property maintenance, property management, tenant management, and property valuation, marketing, and more.

For more information, see our full-cycle real estate investment platform, Marketplace One.

What is Asset Management?

As you can see, asset management is a service that helps a variety of clients with decision-making, portfolio building, and much more. We wish you the best of luck in your financial journey! And, if you need to sell a home, find new real estate investment opportunities, or just need advice on building a real estate portfolio, or national property management, contact us!

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