Asset management is the business of managing money on behalf of individual and institutional clients. Some asset management firms are giants, managing trillions of dollars, while others are small with just a few employees.
Asset managers invest money in order to meet client goals or their investment mandate. If you work with a financial advisor, they may hire an asset manager, in the form of a mutual fund or ETF, to actually invest your money.
What is an asset manager?
Asset managers come in many different forms. Here are a few of the most common.
- Registered Investment Advisors (RIA)
- A Registered Investment Advisor is a firm or individual that advises clients on their investments and may make investment decisions on behalf of clients. An RIA is a fiduciary, which means they must put their clients’ interests before their own or that of their firm.
- Investment broker
- Investment brokers buy and sell securities on behalf of clients, sometimes earning a commission in the process.
- Financial advisor
- Financial advisors assist clients with a number of different aspects of their financial lives, which may include managing their investments. Some advisors are fiduciaries, while others are not, so be sure to ask before choosing a financial advisor.
- Robo-advisor
- Robo-advisors use algorithms to build investment portfolios based on a client’s goals and risk tolerance. The portfolios are typically built using ETFs that are managed either internally, or by an external asset manager.
Asset managers vs. brokers
Asset managers and brokers may sound similar, but the two roles are quite different. Brokers execute trades in securities such as stocks and bonds for clients, while asset managers manage investment portfolios.
For example, a mutual fund you own is managed by an asset manager, whereas if you wanted to buy a stock or some other security, you’d do that through a broker.
How much does an asset manager cost?
Asset management costs can vary from one manager to the next. In general, asset managers charge fees based on assets under management. For example, a 1 percent management fee would mean someone with $100,000 in assets would pay $1,000 a year.
In fund form, these fees are expressed as an expense ratio. Actively managed funds, or funds that try to beat the market, typically charge higher fees than passive strategies. Passively managed funds, or index funds, come with significantly lower fees and may cost you just a few dollars for every $10,000 you have invested.
Benefits of working with an asset manager
The main benefit of working with an asset manager is that they’ll manage your investment portfolio so you won’t have to. Imagine having to build a diversified portfolio of hundreds of different stocks and manage it on your own. Instead, you’re able to buy mutual funds through asset managers that do it for you.
Blackrock, Vanguard and Fidelity are some of the largest asset managers in the world today, offering many different fund options for whatever your investment needs are. If you’re not sure how to get started, a financial advisor can help you identify which funds might make sense for your situation.
Bottom line
Asset managers manage investment funds on behalf of clients including through mutual funds, ETFs and private accounts, among other structures. Asset managers work to grow their clients’ portfolios over time in order to help them meet their financial goals.
Financial advisors can help you select an asset manager to work with or may act as one themselves. If you’re looking for an asset manager in your area, consider using Bankrate’s financial advisor matching tool.
FAQs
Bottom line. Asset managers manage investment funds on behalf of clients including through mutual funds, ETFs and private accounts, among other structures. Asset managers work to grow their clients' portfolios over time in order to help them meet their financial goals.
How to answer why asset management interview question? ›
In an asset management interview it's always great to say that one of the primary reasons for your interest is being able to leverage being part of the firm and getting to learn from the collective experience and expertise of hundreds or thousands of other employees.
What does an asset manager do? ›
Asset managers manage and monitor a company's assets. This could include property, money, stocks, shares and bonds, commodities, equities and other financial products. As an asset manager, you'd aim to maximise your employer's return on investment.
What are the four major functions of an asset manager? ›
An asset manager is responsible for creating a client's portfolio, overseeing it from day to day, making changes to it as needed, and communicating regularly with the client about those changes and how well their investment goals are being achieved.
What is asset management in simple words? ›
Asset management is the day-to-day running of a wealth portfolio. It is usually headed by an investment manager. The management of assets involves building a portfolio of investments. This includes assessing risks, finding opportunities, and developing an overarching strategy for reaching a set of financial objectives.
Why do I want to be an asset manager? ›
“Why asset management?” is a popular interview question. While the typical response often mentions a passion for investing, for many the simple truth is that the work-life balance in this field is far better than it is in investment banking or private equity.
What are the 3 pillars of asset management? ›
To summarize, effective asset management revolves around the three interconnected pillars of inventorying assets, assessing conditions and hazards, and maintaining assets.
Which 3 are principles of asset management? ›
These Asset Management Principles are briefly characterized:
“Failure Modes” – not all assets fail in the same way. “Probability” – not all assets of the same age fail at the same time. “Consequence” – not all failures have the same consequences.
What is meant by asset? ›
In financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value.
What is asset ID? ›
Asset IDs are a tool to help you track and organize content you're using more effectively. Additional benefits of Asset IDs include: Easily search our library by asset ID for files you've previously downloaded and need to relocate.
To open the Asset Store window, select Window > General > Asset Store from the main menu in Unity. During your first visit, you can create a free user account which allows you to log into the Store on future visits and keep track of previous purchases and downloads.
What is the reason for asset management? ›
Asset management makes it easy for businesses of all sizes across all industries to keep track of their assets, whether liquid or fixed. Employees will know where the assets are located, how they are being used, and whether there are changes made to them.
Why are you interested in asset and wealth management? ›
Answer: Express your passion for helping clients achieve their financial goals. You can mention the long-term relationship-building aspect or the intellectual challenge of portfolio management.
How do you answer why you would be an asset? ›
How to answer "How would you be an asset to the business?"
- Research the organization's goals. Before your interview, you can do some research to learn about the organization's values and goals. ...
- Consider the role's primary duties. ...
- Emphasize competence. ...
- Mention collaboration. ...
- Demonstrate enthusiasm. ...
- Adapt your approach.
A career in the asset finance industry is an opportunity to write your own pay cheque while also helping small businesses grow and thrive. Here, Elisabeth Stewart, operations executive at Portman Asset Finance offers her advice for those aspiring to get involved.
