Asset Management Companies: All You Should Know
Producing strong investment returns is one of the most significant achievements that a wealthy investor could strive for. However, you might not necessarily have the expertise and resources to generate profitable gains consistently on your own.
This is where asset management companies come in. Whether or not you choose to engage the services of asset management companies or hire a financial expert of your own, you need to be sure you’re working with the best of the best. Our Ultimate Guide can help investors with more than 10 million dollars in liquid investments find the best financial advisor for them.
STRATEGIES FOR FAMILIES WORTH $5 MILLION TO $500 MILLION
7 Secrets To High Net Worth Investment Management, Estate, Tax and Financial Planning
The insights you’ll discover from our published book will help you integrate a variety of wealth management tools with financial planning, providing guidance for your future security alongside complex financial strategies, so your human and financial capital will both flourish.
Clients frequently share with us how the knowledge gained from this book helped provide them tremendous clarity, shattering industry-pitched ideologies, while offering insight and direction in making such important financial decisions.
Our firm, Pillar Wealth Management, can offer you unbiased, expert advice on asset management in addition to other wealth management services. We are experienced in dealing with the portfolios and high-value assets of high net worth and ultra-high net worth investors with 5 million to 500 million dollars in liquid investments. To work with one of our skilled managers, you can book a free consultation. We can help you identify if you’re on track to achieving your financial goals.
What is Asset Management?
In general terms, asset management is the handling of tangible and intangible assets to increase their value. Other categories include physical asset management and compliance asset management, pertaining to digital assets and contracts. In the finance sector, asset management holds a slightly different meaning.
Financial asset management involves financial experts, asset management companies, or firms that manage investments for a wealthy clientele. For example, an asset manager or investment manager would track, handle, and overlook their client’s portfolio and assets. Wealth managers can help with asset management and boost your portfolio’s performance. You can read our Performance Guide to learn about some of the strategies we use at our wealth management firm.
Asset management companies invest money in various vehicles, including bonds, stocks, real estate, and indices, while catering to your financial goals. Their service is designed for clients with diverse portfolios that contain large amounts of assets, such as high net worth individuals, corporations, governments, institutions, and large nonprofit foundations.
The process of asset management allows you to navigate your investment portfolio, create strategic plans to minimize taxes, costs, and fees, and manage your liquid and illiquid assets appropriately. The asset classes that asset management companies can assist you with include lease investment, investments in debt capital markets, fixed income, deposits, trade receivables, among others.
4 Key Elements of Assets Management Companies
1. The Role of Asset Management Companies in Financial Management
If you’re seeking a firm to help you manage your assets, you might be wondering, “What do asset management companies do?” Although some companies specialize in particular asset management categories, many give you an option of services to choose from.
The services of asset management companies can comprise long-term passive investing, long-term value investing, hedge fund management, launching and investing in mutual funds and index funds, opening and monitoring individual accounts for affluent investors, insurance company asset management, and creating retirement plans.
Asset management companies employ financial experts who specialize in particular fields, for example, financial analysts, economists, and asset managers. Financial analysts research investment options, potential opportunities and determine the best time to buy or sell assets. Economists observe the current market situation for any fluctuations or downturns. Lastly, the asset managers at asset management companies use the information collected by financial analysts and economists to liaise with clients and recommend asset management decisions.
2. The Advantages and Disadvantages of Asset Management Companies
Asset management companies have the advantage of being able to invest in large asset classes, such as multi-billion-dollar infrastructure projects, that an individual investor would not have access to. Asset management companies can purchase more securities at a negotiated price since large operations’ per-unit costs are lower, and overhead costs are reduced. Additionally, you can move your wealth between multiple accounts, from credit cards and investment accounts to margin loans and checking accounts.
Every investment carries a risk, however small. Asset management is no exception. Asset management companies may underperform, which can cost them a lot of money. Most asset management companies come with a considerably high management fee which must be paid regardless of the client’s portfolio performance. If you’re looking to maximize your portfolio’s growth, our five critical shifts guide can help you.
The asset manager you work with should understand your wishes and goals. Reputable asset management companies will take the time to communicate with you and suggest different strategies to help you achieve the financial life you envision for yourself.
3. How Can Asset Management Companies Help Wealthy Investors?
Taxes come with all new income sources, whether you have a Social Security account or a pension. Affluent investors are continuously seeking ways to minimize their taxes. If you wish to withdraw money from these accounts, they tend to come with tax bills that can often be hefty if you choose to withdraw a large amount of money or if you withdraw your savings early.
An asset management company can monitor your taxes by mapping out a plan to allow you to enjoy your standard of living without losing your money to unnecessary expenses. It can give you access to investing tools and products that give you financial stability. An experienced asset manager can enable you to maintain high levels of financial independence and freedom well into your retirement.
Now that you have a clearer understanding of what an asset manager does, you can see that a reputable asset management company can give you the financial security you need. Our book, The Art of Protecting Ultra-High Net Worth Portfolios and Estates – Strategies for Families Worth $25 Million To $500 Million, is useful in understanding the different threats wealthy investors might face and how to overcome them.
How To Protect Your Assets
Protecting your assets is necessary when you have spent years accumulating your wealth. Your wealth should be able to sustain you even through retirement and unforeseen circumstances. This raises the question, “What do asset management companies do to safeguard your wealth?”
You might think your assets are secure, but threats can arise from multiple places, such as malpractice claims, discrimination, sexual harassment lawsuits and accusations, divorce, debt, employee accidents and injuries, personal injury lawsuits, and medical issues.
An asset management company can help you set up a proper business entity to protect some of your assets from lawsuits. They can provide you with an array of insurance options, from commercial liability insurance to life insurance. The best asset management companies will also create protective barriers for your retirement accounts.
Wealth transfer is another concern for rich investors. Pillar Wealth Management uses strategies to protect your wealth and safely transfer it to your heirs. Our wealth managers know that you and your family deserve the best money management and asset management services out there. Contact us to start a conversation about how you can protect your assets effectively and get the most out of your investment portfolio.
4. Selecting the Right Company for Asset Management
When it comes to selecting a suitable asset management company, there are a few things you should keep in mind. Each firm can have its area of specialization or may offer generalized financial services and products that their investors might be interested in. Similarly, they might have asset managers who are experts in varying fields.
Some asset management companies can narrow their services to long-term investors who prefer a passive investing or value investing approach. Others might function through private, individually managed accounts for their wealthy clients or hedge funds. Hence, it would help if you did your research into any asset management company that you consider and identify their clientele, services, and fee structure.
An asset management firm will typically have various advisors with different specialties and levels of experience. Looking into their credentials and capabilities will give you an insight into their legitimacy. It is vital to understand how the company works with your wealth to create the portfolio that you want. It is crucial for ultra-high net worth clients with a net worth above 10 million dollars to make this decision after heavy consideration. Our guide can help you understand the qualities you should look for in a financial advisor.
What is their Fee Structure?
Asset management companies can change their fee structure based on your portfolio’s specifics and how they compensate their managers.
The investment fee can range from a few basis points to a considerable percentage of shared profits earned through performance-agreement accounts. Some firms might charge a minimum annual fee starting at five thousand dollars to ten thousand dollars.
Be cautious when studying their payment structure, as some firms might have a low asset management cost, but they earn their money through transaction fees and commissions. Alternatively, firms might have no upfront transaction fees or commissions but may charge more on products and services that you’re offered.
A fee-only asset management firm makes money only through their management fee, not through commissions or products. For many clients, this is preferable as it eliminates any conflict of interest by ensuring that the firm gives objective investment advice to benefit the client.
When you have a fortune that you want to protect, selecting a financial advisor or money management firm with the right cost structure is necessary. We discuss more on this topic in our guide, The Ultimate Guide to Choosing a Financial Advisor.
Understanding Asset Management Companies
Asset management companies are businesses that invest the pooled funds of their customers in various products such as stocks, bonds, mutual funds, ETFs, and indexed funds. They may offer alternative investments such as hedge funds, venture capital, private equity, real estate, art, or antiques.
An asset management company may be a small firm that acts as a money manager for a restricted group of very wealthy individuals. In contrast, it may be a large multi-national company with trillions of dollars in assets under management.
Regardless of its size, an asset management company works with its customers to ensure that their investments are profitable in the long run. The asset manager recommends investments, monitors the portfolio, and rebalances it as needed.
Besides asset management, many asset management companies offer services such as retirement planning and tax management. They can help you create a financial plan and even establish a strategy for passing on your assets when you die.
1. Asset Management Company Fees
Investors with an asset management company will pay fees for the services they receive, which may be fixed or variable. Some fees are set as a percentage of the value of the assets under management, which can range from 0.5% to 2%, thus varying with the value of the portfolio. The company may require a minimum investment amount to ensure the fee meets its profit horizon. The investment fee could be fixed at the start of the contract and maintain that value for the duration.
Asset management companies may also have flat fees for services such as preparing a financial plan and hourly fees for consultations.
2. Buy Side vs Sell Side
Asset management companies are considered buy-side firms because they buy securities from brokers for investors. On the sell side, broker-dealers create stocks, bonds, and other instruments.
Asset Management Company vs. Brokerage
Along with asset management companies, brokerages or broker-dealers are registered with the SEC. Asset management companies utilize brokerages to execute their trades and to act as custodians for the investor’s account.
Brokerages may also provide financial advisory services, so there is a lot of overlap between the two types of financial institutions.
Asset Management Company Examples
Asset management companies include such well-known brands as BlackRock, Vanguard, Edward Jones, and Schwab, which manage to assets of thousands of individuals and organizations.
In Florida, the financial advisory Florida Financial Advisors (FFA) seeks to meet the specific financial needs of Floridians. The firm holds $61.9 million in assets under management.
Florida Financial Advisors’ approach to investing adheres to modern portfolio theory, looking at the market holistically and diversifying investments to minimize risk.
The firm recommends one of six portfolio models, ranging from passive to active—these strategies include long-term purchases, short-term purchases, trading (securities sold within 30 days), short sales, margin transactions, and option writing.
To identify investment opportunities, FFA utilizes technical market analysis that looks at a company’s overall financial health, market trends, and the state of the economy (nationally and globally). The firm offers mutual funds, ETFs, stocks, bonds, and options. It may recommend alternative investments.
Pillar Wealth Management: The Best United States (U.S.) Asset Management Company
Finding an asset management company is easy. There are numerous asset management companies (AMCs) out there such as Blackrock, Vanguard Group, Allianz Global Investors, and so forth. However, those companies will not guarantee that you will get the best asset management services, which is where Pillar Wealth Management can help. Especially if you are in one of the big cities of the world’s economic leader, like New York City, San Francisco, Washington, D.C, and Los Angeles, maintaining your assets is very crucial.
Pillar Wealth Management offers you various services. Including managing your asset classes such as bonds, stocks, and other funds. Our company can act as both your investment company and money management firm, including your investment advisor and money manager. Each client has their own characteristics; some clients need investment assistance. The Pillar WM team can provide you with the best investment advice and the best investment services.
Our investment managers do market research to analyze client portfolios based on the clients’ investment objectives. The manager will also tell you about investment minimums that you need to start. We have assets under management (AUM) worth millions, proof that we are the best service provider. If you want to know more, visit our site and take a look at the client testimonials.
Should You Go with an Asset Management or a Wealth Management Firm?
As a wealthy investor, you might have heard that wealth management is the best option for you. So, how do wealth management services differ from asset management companies’ services?
Asset management, as you should know by now, focuses entirely on investments. The firm usually caters only to clients who have a high net worth and helps them allocate their assets. Their goal is to grow your portfolio by making smart purchasing decisions to enhance your returns while minimizing risks.
Wealth management, like asset management, caters specifically to high net worth or ultra-high net worth clients. The difference is that they take a closer look into your or your family’s financial situation. Asset management is only one part of their array of services, which can include estate planning, legacy planning, financial planning, fund management, risk management, and even philanthropic goals. With an in-depth analysis of your finances, wealth managers can guide you on protecting and managing your wealth effectively. Their fiduciary code of conduct ensures that your money is in safe, reliable hands and is not squandered because of unnecessary conflicts of interest.
The service you choose to go with will depend on your personal preference, businesses, and your level of wealth. It is up to you to decide which one will serve you best in helping you achieve your financial goals. If you would like to contact one of our experienced wealth managers for a second opinion, you can schedule a meeting with us.
For high net worth and ultra-high net worth investors, asset management has become a complex task and only gets more complicated as you gain more wealth or start planning your retirement. Asset management companies work with wealthy families to create a plan and help them manage their investments strategically.
Pillar Wealth Management has an asset management system that gives you a projection of how well your financial plan is aligned with your short-term and long-term goals. We work exclusively with the affluent list of investors who have a net worth of 5 million to 500 million dollars including retail investors, and so on; therefore, we know how to approach high-value assets that might be dispersed across numerous accounts. Our asset managers use strategic asset management processes to optimize your portfolio performance, keeping in mind your risk tolerance and desired lifestyle. Call us to start a conversation about how our services can help you with your wealth and investment management.
Frequently Asked Question about Asset Management Companies
Asset management companies pool together their customers’ funds to invest in securities and other investments, allowing investors to benefit from investments not otherwise available.
Asset management companies manage investments for individuals and organizations, making recommendations based on the client’s needs and executing trades through a brokerage.
Examples of asset management companies include BlackRock, Vanguard, Schwab, and Edward Jones. Many other companies are less well-known but equally effective.
BlackRock is the world’s largest asset manager, providing financial services to thousands of individuals and organizations.
The major categories of assets are stocks and bonds, mutual funds, index funds, and ETFs, as well as alternatives such as hedge funds, venture capital, and real estate.
Asset management companies make money from the fees paid by customers, which are based on the value of the customer’s investments held by the firm. Customers also pay fees for trading securities.
A good way to find an asset management company is through word-of-mouth. You can also do some research online and study the history of various firms that appeal to you.
In the US, asset management companies are regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
Active asset management aims to outperform a benchmark, such as the S&P 500 Index. Passive management seeks to reflect the asset holdings of a particular benchmark index.
You can monitor the performance of your portfolio through your financial advisor, or you can utilize portfolio analyzer software such as Empower or SigFig and keep a spreadsheet of the results, updated monthly.
To be 100% transparent, we published this page to help filter through the mass influx of prospects, who come to us through our website and referrals, to gain only a handful of the right types of new clients who wish to engage us.
We enjoy working with high net worth and ultra-high net worth investors and families who want what we call financial serenity – the feeling that comes when you know your finances and the lifestyle you desire have been secured for life, and that you don’t have to do any of the work to manage and maintain it because you hired a trusted advisor to take care of everything.
You see, our goal is to only accept 17 new clients this year. Clients who have from $5 million to $500 million in liquid investable assets to entrust us with on a 100% fee basis. No commissions and no products for sale.
- Liquid Net Worth Meaning – As a high net worth or ultra-high net worth investor, you must have undoubtedly come across…
- Investment Management Portfolio – Do you want to create an investment management portfolio? A vital tool for high net worth and ultra-high net worth investors…
- Private Banking Wealth Management – As a wealthy investor, you should want your fortune to be secure in the hands of reliable…
- Investment Firm – If you have managed to accumulate $5 million or even $500 million in liquid assets…