What is asset management?
Asset management is concerned with the management and growth of total assets. To this end, assets are acquired, managed and traded. Good asset management selects assets that have the potential to increase in value and generate high returns. The main objective is to increase assets to the maximum – with an appropriate balance between opportunities and risk. In addition to increasing the value of assets, asset management also pursues the goal of minimizing risk. The service is offered by banks and financial institutions, for example. Clients often also choose independent asset managers, as they can represent the interests of clients independently of the interests of banks.
What does asset management involve?
Managing and monitoring a securities portfolio is very demanding, requires a high level of expertise and takes a lot of time. If the wrong assets are selected, the existing assets may be lost. That is why it is worth commissioning a good asset management company to manage your assets.
Asset management companies generally perform the following tasks:
- The first step in asset management is to clarify the client’s financial goals:
It is important to take risk tolerance and risk capacity into account. For example, clients need enough liquid assets to cover their living expenses. The individual financial situation and life planning also play a role. Personal circumstances must therefore always be taken into account in a sensible investment strategy. - If a client has opted for asset management, this is recorded in an asset management agreement. In addition, the asset management company receives limited power of attorney and structures the securities portfolio in such a way that the client’s objectives are covered.
- It is then the task of asset management to monitor and maintain the securities portfolio. If necessary, asset management must react in good time and make changes and inform clients regularly.
Asset management is expected to carry out research and analysis. Both macro- and micro-analytical tools are used. This includes statistical analysis of prevailing market trends, review of company financial records and anything else that could help achieve the stated objective of increasing the value of client assets.
A good asset management company also offers supplementary services such as financial advice and investment advice.
What are the advantages of independent asset management?
Independent asset management has the clear advantage that it can work completely free of conflicts of interest. It is independent and does not have to sell any specific products. Care must be taken to ensure that no retrocessions or commissions are paid in asset management. This is the only way to ensure that asset management pursues the interests of clients and does not simply sell products that promise high commissions. An independent asset management company is not usually bound by any sales targets.
An independent asset management company can access the full range of products on the capital market. A financial institution with its own products, on the other hand, will first and foremost use its own products. In addition to the advantage that independent asset management has access to the entire product universe, it can compare costs and optimize them for its clients.
Another advantage of independent asset management is the remuneration: a good, independent asset management company is very transparent when it comes to remuneration. When choosing an asset management company, it is important to ensure that it does not accept money by brokering products. Asset management companies should earn their money by increasing their clients’ assets. This is in contrast to banks, which can also earn money through exchange rate mark-ups, management fees for their own products, custody account fees, transaction fees and sales and portfolio commissions, for example.
So if you want to choose a good asset management company , you should make sure that it really represents your interests.