Asset Management Firm and Its Advantages – PillarWM
Generating high investment returns is one of the most remarkable achievements that an affluent investor could strive for. Nevertheless, you may not necessarily have the resources and expertise to consistently produce strong investment gains if you take up this task on your own. This is where an asset management firm comes in. Whether or not you choose to hire their services or enlist a private financial advisor, you need to be sure you are working with someone who is highly skilled and knowledgeable in these matters. In our ultimate guide for investors with more than $10 million in liquid wealth, we discuss how you can find the best financial advisor for yourself.
Our firm Pillar Wealth Management can provide you with objective and proficient advice on asset management along with a range of wealth management and financial advisory services. We have plenty of experience in working with the high-value assets and investment portfolios of ultra-wealthy individuals with $5 million to $500 million in liquid assets. To start working with our competent financial experts, click here to schedule a free consultation with us. We can help you identify if you’re on the right track to attaining your financial objectives.
Table of Contents
What is Asset Management?
Simply stated, asset management refers to the regulation of tangible and intangible assets to increase their value. Other classifications include compliance asset management and physical asset management, pertaining to contracts and digital assets. However, in the financial world, asset management has a slightly different meaning.
Financial asset management encompasses financial firm, experts, or companies that manage investment for an affluent client base. For instance, an investment manager or asset manager would monitor, management, and supervise their client’s assets and investment portfolio. On the other hand, wealth managers can offer assistance related to asset management and enhance your portfolios performance. You can go through our guide, Improving Portfolio Performance, to know more about the wealth management strategies we use at Pillar Wealth Management.
An asset management firm invests your wealth in several different investment vehicles, such as stocks, bonds, indices, and real estate, to help you achieve your financial objectives. They have specialized services for clients, such as governments, corporations, high net worth individuals, etc. who have diverse portfolios comprising large amounts of assets.
Asset management helps you navigate through your investment portfolio, develop strategic financial plans to lower fees, costs, and taxes, and effectively manage your liquid and non liquid assets. The asset categories such firms can assist you with include investments in debt capital markets, lease investments, trade receivables, deposits, fixed income, among others.
What Are the Types of Asset Management?
As discussed earlier, the term asset management refers to a broad category of management that encompasses several distinct disciplines and industries. Here is a list of some of the different types of assets management.
1. Digital Asset Management
Digital asset management is a fast-growing field. It encompasses the efficient organization of digital content and media, as well as storing and processing it.
By limiting access to items such as building plans, meeting recordings, and intellectual property rights, stakeholders avoid the cost of maintaining several copies of these items in different storage locations. More importantly, they can stay confident that their digital files are effectively secured fire, water damage, and natural disasters.
2. Fixed Asset Management
Fixed assets refers to all kinds of items used by a firm to create income. Some examples of fixed assets include appliances, installed machinery, and plumbing installations. Fixed asset management is generally carried out for purposes of financial accounting, loss prevention, and maintenance.
3. IT Asset Management
IT asset management includes management of software and hardware. The benefit of IT asset management is that it helps save resources, offers security, and develop a robust technological footing for the future.
4. Financial Asset Management
Financial asset management, often simply known as asset management, refers to a more conventional understanding of managing assets. It is the sector of financial services industry that manages client’s investment accounts and investment funds.
Financial asset management includes tracking market rates, tax obligations, and other financial liabilities, such as debts. The purpose of financial asset management is maximization of profits along with mitigation of risks. For more details regarding financial asset management, click here to speak to our financial advisors at Pillar Wealth Management.
5. Infrastructure Asset Management
Infrastructure asset management is the blanket term for the strategies needed to maintain and update vital utilities, such as roads, electricity, water access, etc.
6. Enterprise Asset Management
Enterprise asset management refers to the fixed assets of a firm including acquisition, maintenance, operation, and decommissioning. The definition of enterprise asset management is generally expanded to include intangible assets.
What Are the Benefits of Hiring an Asset Management Firm?
All kinds of asset management involve strategizing to accomplish an established goal. Going about buying and selling of an asset portfolio that will generate high returns, enhancing the assets valuations, and acquiring further assets are the primary objective when managing investments and assets. This is the kind of expertise that asset management companies bring to the table.
However, if you are still thinking, what are the benefits of asset managementfirms, continue reading below.
1. Benefit from Expert Analysis
If you are a high net worth or an ultra-high net worth individual who knows their way in the asset and investment management world, good for you! However, if you’re clueless about how to make investment decisions or have too much on your plate already, you should consider hiring an asset management firm.
Financial firms such as Pillar Wealth Management can help you make important investment decisions that can make or break your portfolio. Hence, you can stay confident that any decisions related to your assets are being evaluated by an expert who has several decades of experience and excellent knowledge of how the investment world functions.
2. Identify and Lower Hidden Investment Risks
Managing investment includes risk management which has long been an essential aspect of any investment. By recognizing and monitoring such risks based on past experiences, they can identify and narrow down crucial factors that could possibly wreck your investment portfolio.
The lower the risk, the higher the room for the financial advisor to strategize, move around, and have a higher number of safe choices to opt for. Once they identify the risks, they can help you avoid them if possible, or they can find a way to work around them and minimize the effect if they cannot be completely eliminated. Read our guide here and learn the five critical shifts you need to make to maximize your investment performance and protect your assets.
3. Protect Your Portfolio During Economic Downturns
No financial market is 100 percent secure these days. Things can change within a split second. Unpredictable developments in politics and environmental changes can flip market trends at any moment and only those who are well-prepared for such unforeseen events will be able to survive. This is where asset management firms can secure you.
Several strategies, such as the ones listed below, can shield your investment portfolios from uncertain and volatile market conditions
• Portfolio diversification which ensures that your investments aren’t entirely exposed to dips that happen in the market.
• Maintaining sufficient liquidity at all times through debt refinancing, having real estate investment trusts, etc.
4. Enjoy Increased Financial Security
If you don’t have any information regarding investment decisions, chances are you will either be too conservative or too aggressive in your next move. This could possibly be because you aren’t fully aware of the risks and have no prior experience of knowledge, so your strategy doesn’t have any sound backing.
Using the services of an asset management firm gives you peace of mind, knowing your holdings are being managed by a professional who knows precisely what they’re doing. At Pillar Wealth Management, we have historical economic data that goes back nearly a century so you can be confident that we are making investment decisions that are backed by solid research and data.
What Are the Best Asset Management Firms?
One thing you need to keep in mind when hiring an asset management firm is that not all asset management firms are created equal. Some may have the required experience but may not be well-versed in dealing with high net worth and ultra-high net worth clients. Others may know how to mitigate investment risks but may not know how to create a tax-efficient portfolio.
Thus, if you want to avail all the benefits offered by financial asset management, it is imperative to find the top asset management firm. In our handy guide here, we discuss how you can choose a financial advisor that can help you accomplish all your long and short-term financial goals.
In addition, we have listed down some of the most critical features that lead to effective and successful asset management.
1. Customized Solutions
Suppose you opt for an asset management firm that helped your relative accomplish their investment targets. Or you might hire a firm because they are one of the best asset management firms that you have heard of. Does that guarantee that you will receive the high-grade asset management you are searching for? Not quite.
Comprehensive asset management starts with understanding your unique goals and needs regarding how you wish to spend your life. The asset management firm you choose focus on creating an asset management plan that helps you live the life you want to live. When searching for the best asset management, make sure to ask questions such as, “how will you help me attain my retirement targets?” and “how will you help me manage my assets?”
2. Proper Asset Diversification and Allocation
Asset diversification is a vital component of asset management. Improved asset allocation and diversification can allow you to lower your risks while maximizing your assets performance.
The asset management firm you choose should diversify your assets into a combination of cash, bonds, and stock to lower investment risk. So, in case a market event influences your bonds, it will have a less pronounced impact on your stocks, hence allowing you to minimize your losses.
If you are an investor with more than $25 million worth of liquid assets and want to know more about the importance of asset diversification and allocation, order a free hardcover copy of our book, The Art of Protecting Ultra-High Net Worth Portfolios and Estates – Strategies For Families Worth $25 Million To $500 Million.
3. Passive Investment Management
Before hiring an asset management firm, you need to find out if they utilize active or passive investment management. Active asset managers buy and sell assets in an attempt to outperform a particular index, such as the Nasdaq 100 Index. They do this by conducting detailed research, predicting market trends, looking out for any political or economic changes, and evaluating any other factors that may influence your assets. The data is then utilized to purchase or sell assets.
This portfolio management strategy aims to outperform the market and thus, exposes you to increased market risk. The amount of work that is required by active investment management also results in higher management costs.
Generally, active investment managers charge more than passive investment managers. Moreover, you can even expect to incur higher tax bills resulting from short-term capital gains.
Last Few Words
For high net worth and ultra-high net worth individuals and families, asset management has become a challenging task and only gets more challenging as your wealth increases or you start planning for your retirement.
Pillar Wealth Management has an asset management tool that gives you a forecast of well your financial strategy is aligned with your short and long-term financial goals. We exclusively cater to wealthy individuals who have liquid wealth ranging from $5 million to $500 million, hence we are adept at managing high-value assets that might be dispersed across various accounts. Get in touch with out team and find out how our services can assist you with investment and wealth management.
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