Asset Management vs Wealth Management: What You Need to Know

High-net-worth individuals with assets worth over $5 million leverage high-profile wealth management and asset management services to sustain and expand their net worth. After all, accumulating a lot of wealth is not the only objective. The ultimate goal is to be able to maintain that status quo. This is where you require expert financial guidance, including choosing asset management vs wealth management.

However, it is easy to confuse the two terms, considering it is essentially your assets that constitute your wealth. So, asset management and wealth management should account for the same thing – but that’s not the case, which is why it is essential to take the time to understand asset management vs wealth management. If you are interested, you can also read our exclusive guide on choosing a financial advisor to ensure you opt for the right services.

While some aspects of asset management vs wealth management overlap, in reality, these are two different services designed for different purposes. In this blog, let’s take an in-depth look at asset management vs wealth management to help you realize the main differences between the two.

At Pillar Wealth Management, we offer asset management and wealth management (it’s not about asset management vs wealth management) for high-net-worth clients. We are a fiduciary advisory firm geared towards helping investors and high-net-worth individuals with $5 million to $500 million in liquid investment assets streamline their finances and reach new heights of success. You can connect with the Pillar Wealth Management team to arrange a free consultation at your convenience or learn more about our services.

What is Asset Management?

Let’s look at the components of asset management vs wealth management. The definition of asset management is rather straightforward and easy to understand. Your assets are your financial holdings, including fixed assets that are typically for long-term use and current assets that can be quickly converted to cash. For high-net-worth individuals, asset management may further include other asset groups as well.

Regardless, asset management is primarily about investments. In other words, the service focuses on the investments you make to ensure they are beneficial to your overall portfolio. One aspect of an asset manager’s duties revolves around determining when, where, and to invest or pull out money from investment to ensure your goals are met. They can also take an in-depth, forensic look at your existing portfolio to reveal valuable insights, such as what part of the portfolio should rely on stocks, what percentage should be built on growth products, and what operations should be based around fixed-income assets.  

Asset managers know exactly what impacts your portfolios. You can also learn about it in our exclusive guide on the 5 critical shifts that impact investment portfolios.

There are three primary types of asset management: financial asset management, physical asset management, and compliance asset management. We will focus mainly on financial asset management for this blog because it’s most relevant to high-net-worth individuals. The term financial asset management entails all the services, processes, and functions leveraged to guide the financial portfolio to further success.

You can learn more about setting personal and business goals to protect your portfolio. We recommend you read our book, “The Art of Protecting Ultra-High-Net-Worth Portfolios and Estates – Strategies for Families Worth $25 Million To $500 Million” and learn all about the question of asset management vs wealth management.

The Need for Asset Management

An important part of the asset management vs wealth management comparative guide is to understand the need for each service. Asset management services are designed for individuals and entities with large portfolios comprising diversified assets. Some other common users of asset management services include governments, large nonprofit foundations and organizations, insurance companies, and even corporate companies and enterprises. In short, the need for asset management is universal.

This brings us to an important question: Do you really need to hire asset managers if you can manage your assets yourself or delegate the task internally to your finance team? Well, certified asset managers hold asset management certification that equips them with the advanced knowledge and expertise required to handle highly-diversified, multi-million-dollar assets.

They specialize in asset management principles with an in-depth knowledge of related policies, planning issues, and numerous strategies. They are trained to manage the asset life cycle and assess asset management risks and how they may impact your business.

So, while an internal finance team may produce some results, an asset manager with asset management certification can deliver exponential growth, accelerating you towards your goals. We suggest you read our guide on choosing the best financial advisors to find the right services for your business.

The solution to success in asset management is to build the asset management portfolio around certain achievements instead of the perceived risk tolerance. This is exactly what we do at Pillar Wealth Management. We take asset management to the next level and help you minimize taxes, especially as you move into the retirement stage.

By making the right investments to achieve sustainability, we ensure you are able to maintain your dream lifestyle before and after retirement. Another key element of our asset management is the continual evaluation of investment plans and strategies. Connect with the Pillar Wealth Management team if you are looking for high-profile asset managers.

What is Wealth Management?

The next part of our asset management vs wealth management comparison is all about wealth management. Wealth management is a broader term as compared to asset management. It includes everything in asset management and more!  

As opposed to asset management, this financial and advisory service is not primarily focused on investment. Here, the goal is to aid high-net-worth individuals with the overall financial situation while also consolidating the long-term wealth. The service is more inclusive and covers everything from accounting and taxation to retirement planning, insurance, estate planning, and more.

Wealth managers conceptualize and develop long-term wealth management strategies depending on a number of factors, including your individual goals, family dynamics, current financial standings, inheritance paradigm, and potential risks. Over the years, a wealth manager builds a relationship with clients and continually evaluates the implementation of wealth management strategies to ensure everything goes according to plan.

For high and ultra-high-net-worth families, wealth management is the ideal alternative as it offers the various financial aspects packaged within a single high-value and comprehensive service. Keep in mind that wealth management focuses on helping you achieve your long-term goals. It entails more than just attaining short-term high returns. Instead, sustainability is the key here.

Generational financial sustainability and stability is the ultimate objective of wealth management. The various tools, products, and services that you can access via wealth management allow you to attain and maintain financial independence. Wealth management can aid you in improving your performance portfolio. You can learn more about it in our exclusive guide on how ultra-high net value individuals can improve their performance portfolio.  

The Need for Wealth Management

With a clear understanding the asset management vs wealth management debate, you can select the wealth management services that can help you transition from where you are to where you want to be. In a world where many financial institutes, such as banks and brokers, provide limited services with no consideration for your interests, a personal wealth manager becomes a necessity for high-net-worth individuals who want to sustain and grow their portfolios.

Wealth managers specialize in investment and portfolio management. It is important to understand that while your internal finance team may be able to come up with good or even out-of-the-box ideas, they are likely to lack the experience and knowledge offered by wealth managers. For instance, at Pillar Wealth Management, wealth managers employ over a hundred years of market data and leverage the latest market trends and advanced forecasts to develop unbeatable investment and wealth management strategies.

Another crucial aspect of choosing asset management vs wealth management is risk management. With great wealth come greater risks. You may be able to identify the right securities to invest in or set a monthly/yearly saving amount for yourself. However, it takes years of experience and expertise to identify and mitigate unforeseen risk factors, like market volatility. Wealth managers can help you do just that to avert any financial disasters before they occur.  

Moreover, wealth management includes other services. Your personal wealth managers can provide you banking, accounting, and legal assistance. Plus, let’s not forget estate planning, retirement planning, and tax optimization services. All in all, wealth management is a very well-rounded financial service with a truly holistic approach. If you want to connect with wealth managers with years of experience in managing high and ultra-high-net-worth portfolios, connect with the Pillar Wealth Management Team to arrange a consultation.

Asset Management vs Wealth Management: 3 Core Differentiators  

With a greater understanding of asset management vs wealth management, let’s take a look at the core differentiators.

1. Goals & Focus

With asset management, the goal is to maximize returns on investments. Wealth management transcends beyond this basic goal and aims at preserving and maximizing wealth in the long run. It is achieved through carefully curated wealth management strategies that are continually evaluated with respect to performance and progress. We highly recommend you check out our exclusive guide to learn more about exclusive financial strategies for high-net-worth management.

2. Primary Function

Regarding the asset management vs wealth management debate, asset management focuses on investments, mainly stocks, real estate, income securities, and other assets. The primary functions of asset management typically include identification of suitable asset investment opportunities, risk-return analysis, strategies for asset management, and forensic assessment of past and current data.

On the other side of the asset management vs wealth management debate, wealth management oversees all financial aspects of an estate. It includes asset management, risk management, education, legacy planning, retirement planning, charitable contribution, inheritance planning, and more.

3. Management Approach

Wealth management requires a wider, more holistic management approach as it involves coordination between different functions. For instance, successful wealth management requires high-value inputs from financial experts, accounts, lawyers/attorneys, insurance agents, and numerous other specializations required for evaluating different aspects of financial management.

On the other hand, choosing asset management vs wealth management means choosing a relatively more concise approach requiring less vigorous management. Asset managers are often directly involved in the market and typically possess most, if not all, financial expertise required to reach your goals and requirements.      

When to Hire Asset Management vs Wealth Management Services

Here’s another crucial question to consider: how much wealth should you accumulate before you consider hiring asset management vs wealth management services?

Well, truth be told, there are no hard and fast rules as to when you should hire an asset management vs wealth management professional. Initially, most individuals manage their finances personally or internally within a business. However, as they progress, assets diverse, wealth increases, it becomes challenges to keep track of everything. If you are a high-net-worth person or even in line for a major inheritance, we recommend you consider asset management vs wealth management based on your individual needs and requirements.

Conclusion: Which Financial Service Should You Choose?

The terms asset management and wealth management are often used interchangeably, and it is understandable as both financial services are geared towards money management. Moreover, both asset managers and wealth managers can play an integral role in delivering the lifestyle you envision for yourself and your family. However, as you now know, these two financial services are not entirely the same. The primary factors in choosing asset management vs wealth management lie in the goals, functions, and even the management approach of the service.   

Considering the different aspects of asset management vs wealth management, we can say that, in a way, asset management is a subset of wealth management. It is because wealth management covers investment management, which is typically the primary focus of asset management.

Wealth management is more suitable for high and ultra-high-net-worth value individuals and families looking for comprehensive financial and advisory services. On the other hand, if you particularly want to zoom in on your assets and upgrade your investment portfolio, consider asset management services as they may be a better fit for you.

At Pillar Wealth Management, we understand our diverse clientele’ unique needs and therefore offer both asset management and wealth management to help you attain your goals. We can also assist you in selecting asset management vs wealth management based on your financial needs. Connect with our team at Pillar Wealth Management to learn more about our financial and advisory services and explore your options.

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