What is Asset Management? – that will be the topic of today’s article.
If you are looking to invest as an expat or high-net-worth individual, which is what I specialize in, you can email me (email@example.com) or WhatsApp (+44-7393-450-837).
Table of Contents
Before we start discussing Asset Management, let us know what an asset means.
An asset can be anything that possesses economic value, and it can be tangible (physical) or intangible (non-physical).
Assets can be owned by an individual, an entity, or a government, while the primary objective of an asset is to get an economic benefit from it.
While talking about individuals, assets can be of different types and include:
— Bank accounts
— Retirement accounts
— Equity in a home/property
— Any equity in a business
— Real estate property
These are just some of the common examples of assets that can be owned by an individual.
On the other hand, Business assets include:
— Cash balances
— Accounts receivable
— Motor vehicles
— Other intellectual property
What is its purpose?
There are different reasons why any Individual would buy or sell assets.
This can be said for shares of stock, a home, a vehicle, or anything else, which typically has some economic value.
Someone may sell shares or bonds to use the money obtained from the gains. This can be used for an individual’s purposes or to invest in another asset.
Companies may sell assets to get cash and deal with the liabilities they have, such as debt.
At the same time, companies buy assets during their business lifecycle as they make more money.
I mentioned some tangible and intangible assets of businesses above. However, when a company buys another company, the company which has been bought is also considered an asset.
Depending on the type of asset an individual owns, there are multiple ways to sell it.
For instance, a real estate property can be sold through a broker, a classified, or a realtor.
Tangible assets mean that they have a physical presence such as real estate property, vehicle, gold, hand cash, etc.
Intangible assets are those that don’t have a physical presence such as patents, copyrights, and other intellectual property.
Assets can be classified into short-term assets and long-term assets depending on their nature.
Short-term assets or current assets refer to cash or assets that can be easily converted to cash. Long-term assets or fixed assets seem to be hard to be converted to cash.
On a balance sheet, assets are usually netted against liabilities and equity. This is done in order to determine the financial stability of a particular company.
In simple words, asset management is the process of handling an asset for growing its value so that it can be used for profitability.
This is done through the development, operation, maintenance, and sale of assets.
All of this is done cost-effectively while balancing the risk involved.
The people who carry out this work are known as Asset Management Professionals or Asset Managers.
Some other terms used to refer to these professionals are portfolio managers or financial advisors.
Most asset managers work independently and offer their services to individuals and entities.
However, some professionals work for an investment bank or other relevant financial institution.
The whole purpose of asset management is to increase the value of an investment portfolio.
This is carried out over time while handling risk, sale of assets, purchase of new assets, etc.
In general, people with a higher net worth, government/corporate entities, and institutions opt for asset management.
Asset Managers abide by fiduciary responsibilities, and according to them, they act in the favor of their clients.
Types of Asset Managers
Having said that about asset management, now let us have a look at different types of asset managers.
Registered Investment Advisers (RIA)
An RIA can either be a firm or an individual and mostly cater to the needs of high-net-worth individuals or firms.
In general, an RIA is required to abide by a fiduciary duty to act in the best interest of the client.
RIAs are either registered with the Securities and Exchange Commission (SEC) or state securities regulators.
Unlike other types of financial professionals/firms, RIAs offer services additional to investment advice. Some of the other financial services offered by RIAs include insurance planning, estate planning, retirement planning, etc.
You should also remember that an investment advisor representative is someone who works under an RIA.
RIAs can be having a single IAR or many IARs working under them, which may vary.
To become an IAR, an individual would have to take relevant examinations such as CFP (Certified Financial Planner) or CFA (Chartered Financial Analyst).
However, in the U.S., they can pass the Series 65 exam or both the Series 7 and Series 66 exams. However, not all CFPs and CFAs are IARs, and vice versa.
RIAs offer services to people belonging to different stages of life (rich and poor). Nevertheless, RIAs usually go ahead and work with people with a higher net worth.
Top RIA Firms (in U.S.)
— Evoke Advisors
— Kanye Anderson Rudnick Investment Management
— Gratus Capital
— Nucleus Advisors
— Churchill Management Group
— Pence Wealth Management
— Chevy Chase Trust
— myCIO Wealth Partners
— Buckingham Strategic Wealth
How to choose an RIA?
Shop around until you find the right type of RIA that seems to be advantageous for your investment needs.
Find external information related to the RIA from internet sources such as their website and social media.
While on social media, you can check with other people who follow them so that you can know about their potential.
Following that, the major aspect is to get a detailed overview of their fee report. Note that the RIAs with higher won’t be beneficial to your investment needs, especially with an extensive portfolio.
Like the RIA, an investment broker can either be a firm or an individual. These financial experts are known to indulge in investment-related transactions on behalf of their clients.
Some of the securities that investment brokers deal with are stocks, bonds, mutual funds, etc.
If the investment broker works on behalf of their clients, then it would be known as a broker. On the other hand, if the broker acts in their interests, then it would be known as a dealer.
Online brokers are trading platforms that can be accessed online and are less expensive compared to a person (broker).
However, an investment broker is not the same as a financial adviser. Full-service investment brokers are known to even conduct market research and offer investment recommendations.
There are different ways through which an investment broker generates revenue, which are:
— Fund fees
— Assets under management (AUM) fees
— Account fees
Investment brokers are advantageous for people who are in the beginning stages of their investment careers.
Top Investment Brokers
— TD Ameritrade
— Fidelity Investments
— Charles Schwab
— Ally Invest
How to choose an investment broker?
While going for an investment broker, make sure that the broker is following your investment style.
This should be regardless of your investment strategy, i.e., active investments or passive investments.
The next thing to do is to check whether the broker has acquired all the necessary licenses and registrations.
You should then find out about the fees they charge for the services they offer, and this is very important. Another important thing to find out is the fiduciary responsibility status of the broker.
If you don’t find a suitable investment broker, you can always go for other alternatives like robo-advisors.
A Financial Advisor is a professional who offers financial advice to their clients. One of the major duties of financial advisors is that they don’t just focus on the investments of their clients.
Instead, financial advisors are known to manage the finances of an individual, offer strategies, and help clients achieve their financial goals.
Different titles refer to a financial advisor, which includes:
— Investment advisor
— Financial Representative
— Wealth manager
Most financial advisors either have specific certifications or have pursued qualifications in their specific niche.
Financial advisors can be fiduciary or non-fiduciary. Fiduciary financial advisors usually cater to the needs of their clients while putting the client’s interests above everything else.
Non-fiduciary financial advisors work with organizations or institutions that provide them with benefits. Such institutions offer these advisors incentives when they sell their investment products.
For instance, imagine two investment products (let’s say mutual funds) are being offered. These two funds can be exactly the same, yet you might find that the prices of those two funds differ.
This is because the fund with the lower price works in the best interest of the clients and offers low commissions. Vice versa, the fund with the higher price acts in its own interests and charges a higher commission.
To know whether the financial advisor is fiduciary or non-fiduciary, you can just find the details by asking them about their compensation.
Top Financial Advisors
— Gregory Vaughan (Morgan Stanley Private Wealth Management)
— Lyon Polk (Morgan Stanley Private Wealth Management)
— Mark T. Curtis (Graystone Consulting | Morgan Stanley)
— Brian Pfeifler (Morgan Stanley Private Wealth Management)
— Karen McDonald (Morgan Stanley Wealth Management)
How to choose a financial advisor?
The above-mentioned (top financial advisors) may not be accessed by normal individuals. They are mostly associated with the largest wealth management firms, and because of that normal people can’t access them.
Keeping that aside, let us have a brief look at the information on choosing the right type of financial advisor for your needs.
First of all, evaluate the financial aspects of your life as well as your financial goals. This will allow the advisor to have an insight into your financial situation and needs.
Financial advisors take care of aspects, which are not limited to your investment needs. Some other services include retirement advice, improvement of financial health, financial product suggestions, etc.
As said before, knowing how the advisor makes money will let you have an idea of whether they will or won’t act in your interest.
Fiduciary advisors usually charge fees from the clients, which is usually a percentage of the assets managed. This can either be an hourly rate or a flat rate, which may differ from advisor to advisor.
However, those who earn sales commissions from third parties may not completely act in the favor of their clients.
By the name itself, it is obvious that robo-advisors opt for minimal human interference to offer services. Depending on the inputs obtained from investors, these digital financial advisors offer advice.
This is something like an autopilot system that can be observed in an airplane, where human interaction will be minimal.
To be precise, robo-advisors utilize algorithms to understand the risks and anticipate the goals.
The process starts by seeking information related to the client’s information like:
— Risk tolerance
— Financial situation
The Robo advisors, after collecting the information, will make predictions about investment strategies. Furthermore, they will monitor the changes, if necessary, on an ongoing basis.
With some robo-advisors, you may even be able to access strategies that come with tax benefits.
Most robo-advisors often create a portfolio consisting of low-cost exchange-traded funds (ETFs) instead of individual securities like stocks.
The investor does not need to have a great deal of investing knowledge to acquire services from a robo advisor.
The investment strategies are simple and the time taken for investing is also lower.
However, robo-advisors (AI) may not be as efficient as other financial professionals/firms (humans).
The investors’ options may be limited with robo-advisors, and in some cases, individuals are required to open different accounts.
Furthermore, investment decisions made by robo-advisors are done while considering the basic information of a client.
Top Robo-Advisors (in the US)
— M1 Finance
— TD Ameritrade
— Ally Invest
How to choose a robo-advisor
In general, choosing a robo advisor that caters to your needs is not as simple and easy as you think.
Before selecting a robo advisor, you should pay attention to your specific investment goals. Opt for a robo advisor that offers services that are in accordance with your investment goals.
Get to know the details such as the firm’s licenses and the efficiency of the support staff.
Choosing a robo-advisor that offers tools or advice related to risk tolerance is beneficial.
Try to acquire all the fees and other important details so that you can compare who suits better according to your needs.
Mostly, you get access to investments such as mutual funds and ETFs with a robo advisor. However, pay attention to what sort of funds and ETFs are offered to make sure you are getting what you want.
Financial planners are the category of financial advisors, who primarily concentrate on the best interests of their client’s finances.
Most of the services offered by a financial planner include savings, money management, and investments.
Like financial advisors, financial planners also charge fees that can be an hourly charge or a flat rate, or a percentage of the total assets.
Not all financial planners may be fiduciary, yet most of them tend to be in line with the client’s needs.
Depending on the type of asset manager you choose, you may come across the following types of fees.
— Brokerage fees
— Fund management fees
— Financial management fees
— Managed account fees
— The interest rate on total assets
— Percentage of shared profits
— Administration fees
To check whether the asset manager is transparent, check whether the fees are listed on their website.
Those who list their fees on their website tend to be better compared to those who do not list fees.
How can you benefit from the services that I offer?
Many expats and high-net-worth individuals have been my clients for the past few years. The main objective of the financial services that I offer is to make sure that my clients achieve financial freedom.
People who have a significant net worth (at least $1 million) and need wealth management services, can deal with me directly.
The same applies to ultra-high-net-worth individuals ($30 million+) as well as those looking to invest $125,000 as a lump sum or $2,500 a month.
People who want to invest $50,000 to $125,000 or at least $500 a month can get the services from my expert financial team.
Depending on your requirements, I offer tailored financial solutions focused on retirement, ROI higher than a bank account, and economic security.
I also list all the associated fees on my website, which differ depending on the net worth or the amount being invested.
You can also check out the client testimonials, where almost all the clients were successful in reaching their financial goals.
Kindly note that I do not offer services to individuals who are residents of the United States. Most of the services I offer are primarily targeted toward expats who have trouble finding the right financial expert.
Kindly note that the information provided in this post is for educational purposes and should not be taken as actual financial advice.
I’ve mentioned some RIAs, Brokers, etc., which have been deemed as industry-leading firms or professionals.
However, such data is gathered from internet sources for reference purposes. I am, in no way, affiliated with them and neither do I endorse any of them.
Most people may not have enough time at hand to take care of their financial needs on their own (such as investments).
Some others, even having some free time, may not be highly experienced in investments.
If you fall under such a category and are looking for a financial professional who can tend to your investment needs or financial goals, I can provide top-notch solutions.
Don’t hesitate to contact me if you want to know whether or not you can benefit from the financial services I offer.
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