Asset and Wealth Management

Asset management refers to the management of assets that could involve investments like equity, fixed income securities, real estate, global investments, etc. Asset management firms are concerned with maximizing returns of client’s assets. Wealth management refers to overseeing all the financial aspects of the client and may include management of assets, taxes, estate, cash flows. And all other possible uses of money. Wealth management thus encompasses asset management and takes a holistic view of the client’s finances. Based on their requirements, investors need to decide whether they require the services of an asset management firm or a wealth management firm.

Difference between Asset and Wealth Management

  • Asset managers manage an individual’s/institution’s investments like stocks, fixed income securities, real estate, and other assets. While wealth managers manage all the financial aspects of an individual/institution. Including asset management, tax planning, education, legacy, and estate planning, cash flow planning, insurance, charitable contributions, retirement planning, etc.
  • Asset managers aim at maximizing returns from client’s investments while wealth managers aim at balancing all possible uses of client’s money for preserving and maximizing wealth over the long run. Through financial and investment strategies, accounting and tax approaches, and legal and estate planning.
  • Asset managers mostly offer in-house products and are narrower and more sophisticated in their approach. Since they are primarily investment experts and closer to the market.
  • More process-driven and seek synergy gains through coordination of inputs from financial experts, client’s attorney, accountant, insurance agent, and others.
  • Asset management firms are usually register as broker-dealers and are only require to offer investment products that are “suitable” for the clients. While wealth managers are register as investment advisors and have a “fiduciary” or legal responsibility. To put the client’s financial interests before their own.
  • Asset management compensation has been traditionally commission-base although firms are increasingly shifting to a fee-based model for assets under management. Wealth management compensation has traditionally been retainer fee-base along with a fee for assets under management.
  • The asset managers advise on asset allocation, new investment opportunities, risk-return analysis, portfolio strategy formulation, etc. Thus asset management is only concern about the best way to invest and manage one’s money. While other financial issues of the client like tax planning, cash flow planning, estate planning etc.
  • The aim of wealth managers is to grow the wealth of investors as well as providing advice for future planning. Wealth management service is especially useful for those who are nearing their retirement to assist them in all their future financial needs.