The Complete Guide to What We Do
Money management isn’t easy, especially for high net worth and ultra-high net worth individuals. This is not only because of their vast amount of wealth but also because of the diversity of that wealth. They could have their assets in the form of equity, mutual funds, fixed income investments, real estate, or other commodities. This makes handling all these different assets quite complicated. More importantly, one requires not only a lot of expertise but also a lot of time and effort to manage these assets effectively. So, what should high net worth individuals do for high net worth asset management? It’s simple really. All they need to do is look fortop asset management firms. These firms know everything about asset management, and their advisors can help grow your assets while mitigating any risks. You can learn more about the importance and benefits of these advisors from our complete guide on choosing an advisor for investors worth $10 million or more.
Pillar Wealth Management is a 100% fee-only wealth management firm. We offer a broad range of financial services, such as investment management, risk management, retirement planning, estate planning, tax optimization, accounting, and much more. Our team of fiduciary advisors is entirely dedicated to serving our high net worth clients and helping them achieve their financial goals and targets. Our team works with our clients to properly understand their needs and aspirations in life to create customized financial plans.
In this blog, we’ll be discussing what asset management is, what the difference between asset management and wealth management is, how to find the best asset management firm, how they make money, and finally, the top asset management firms. So, let’s get started.
Table of Contents
What is Asset Management?
Asset management is a service offered by various institutions like investment banks, private banks, wealth management firms, etc. It involves managing the assets of an individual or company by another party. Asset management aims to grow an individual’s assets according to their targets while also minimizing any risks and using the most efficient mix of strategies. You can also learn more about protecting your wealth by ordering a free copy of our book, The Art of Protecting Ultra-High Net Worth Portfolios and Estates – Strategies for Families Worth $25 million to $500 million.
Usually, there is a minimum limit for asset management, so mostly it is targeted towards high net worth as well as ultra-high net worth individuals and families. Asset management firms conduct extensive research, use various analysis tools, study market trends, and a lot more, just to figure out the best asset management strategy for their clients. It can include the management of all the assets of an individual or just some specific part of it, such as real estate or stocks.
What is the Difference Between Asset Management and Wealth Management?
In the world of financial planning and financial services, asset management and wealth management are common terms and popular options for those struggling with money management. But are the two types of services the same? No. Here are some vital differences between them.
Asset management has a very narrow focus; it is all about the assets of a high net worth individual. It is majorly concerned with accumulating, growing, and protecting the individual’s assets. Depending on the asset management firm, its goals are usually tied to some number, and all efforts are directed towards achieving that specific target. However, performance numbers are not always the answer. Find out why by reading our comprehensive guide on improving portfolio performance.
On the other hand, wealth management has a much broader focus. It does include asset management, but it also includes a lot more than that. It takes a more holistic approach to asset management and ties it with other goals, such as retirement goals, short and long-term financial goals.
Similar to the focus, asset management has a much smaller scope as compared to wealth management. It only covers investment and assets. It consists of a lot of research and data analysis to judge different investment and asset growth opportunities and evaluation of the market conditions and trends, etc.
However, all of it is limited only to the individual’s assets. In comparison, wealth management has a larger scope. It consists of various financial services, such as retirement planning, estate planning, tax planning, risk management, and a lot more.
This depends on which asset management firm you choose but some asset management firms, mostly those that deal with products, charge commission, which often leads to some conflict of interest. On the other hand, wealth management firms are held to a fiduciary standard and so, mostly, they work on a fee-based payment method. This prevents any conflicts of interest and allows them to work entirely in your best interests.
Pillar Wealth Management is a 100% fee-only wealth management firm. Get in touch with our managers to learn more about it.
Choosing from the Top Asset Management Firms
If you are thinking of relying on asset management firms, you might ask the following questions, “what are the best asset management firms?”and “how do I find the best asset management company for me?”Well, every individual has different needs, so you will have to evaluate your needs, decide what services you require and to what extent you need asset management to find the best firm for yourself. Once you have that figured out, consider the following few factors.
Not all asset management firms offer the same level of services. Sometimes, some asset management companies might do all the research and analysis of various assets and investment opportunities and simply guide you towards the investments you should consider. They might not carry out any investments themselves or execute any transactions on your behalf. In that case, you might have to approach another company or broker to actually carry out those transactions for you. Therefore, make sure you check the level of services being offered.
It’s also important to look at the expertise and experience level of the asset management firm or the specific asset manager you’re dealing with. Asset management requires a lot of extensive research skills, analysis skills, critical thinking, careful watch and evaluation of market trends, and a lot more. An asset manager without the right expertise and experience won’t be able to capitalize and leverage all this information for the best management of the client’s assets. Similarly, you should also check their credentials and other background information. Doing all this can save you a lot of trouble later on. Click here and read our ultimate guide on choosing a financial advisor to help you figure out how to evaluate an asset manager or advisor.
With most private banks and large investment firms, you’ll find that they offer pre-made and fixed investment packages. These are already tried and tested and proven to be profitable for those institutions without any risks. However, these packages won’t necessarily be the best for you or align with your personal financial goals. That’s why you should make sure that whichever asset management company you choose offers personalized investment and asset management plans so that you can achieve your financial goals and targets more efficiently. This is a crucial aspect when considering a financial advisor. Learn more about it from our handy guide for investors worth $10 million or more.
It’s also a good idea to look at the company’s clientele. If a certain firm mainly deals with individuals and families with $5 million to $500 million in liquid assets, that means they’re primarily serving high net worth and ultra-high net worth families and individuals. They will be better skilled at handling large portfolios and larger, more diverse set of assets.
Some asset management companies focus more on specific division of assets, such as real estate or mutual funds. Therefore, if you don’t need comprehensive and all-around asset management, you can opt for such specialized asset management firms. However, it’s important to check beforehand whether a certain specialty suits your needs or not. Alternatively, you might need a company to manage all your assets while a certain company may only deal with real estate.
As mentioned earlier, some asset management firms can work on commission, and this can lead to a conflict of interest. Moreover, even if they are not working on commission and charging a flat fee, look at their money management and asset allocation strategy. This can also play a major role in how much that asset management company costs you.
For instance, active managers might adopt an investment approach that is heavily focused on betting against the market and executing several transactions in a short time. However, this only drives up the transaction costs and adds to your taxes on capital gains. This is just one of the critical shifts you must know about. Read more about the other shifts you must make from our guide on maximizing portfolio growth strategies for high net worth families.
At Pillar Wealth Management, our experienced wealth managers adopt active and passive approaches to give our clients the best results. Start a conversation with our managers to learn more about our management approach.
How Do Asset Management Companies Make Money?
While some firms do work on a commission basis, most asset management companies charge a flat fee based on Assets Under Management (AUM). Usually, this rate is around 1% and is charged on the total net worth of the client. This aligns both parties’ interests, as the more asset managers help their clients grow their assets, the more service fee they will earn. Therefore, they are both able to work towards a common goal.
Top Asset Management Firms
While there are a lot of asset management firms out there, only the top asset management firms for you will truly help you achieve your financial goals and targets. The problem with most large financial institutions is that they care less about your wealth and assets and are more concerned with their own bottom line and how they can benefit their shareholders. Therefore, any solution they propose for you is not necessarily the best. They might simply ask you some basic questions, such as what your risk tolerance is and how much assets you want to accumulate and offer a fixed investment package based on that. In reality, whether it’s asset management or any other financial service, it always needs to be tied to your ultimate goals in life and the lifestyle you desire.
Pillar Wealth Management, isone of the top asset management firms out there as what we might lack in scale, we make up for through excellent fiduciary services and high expertise. Our managers have more than sixty years of combined experience. We offer completely personalized solutions instead of the cookie-cutter experience you’ll find at other large financial institutions. Click here to start chatting with one of our advisors to learn more about our services.
Asset management is absolutely vital for high net worth individuals who want to grow their assets in a sustainable manner while achieving all their targets and reducing any risks. However, for all this to be successful, affluent individuals need the top asset management firms and advisors to guide them.
Pillar Wealth Management is a white-glove wealth management firm offering various financial services. These include investment management, risk management, retirement planning, and many more. Our wealth managers and advisors have an experience of more than 30 years in the industry. We keep a close eye on the market trends and conditions, which we leverage to provide unique financial solutions to our clients. Start a free consultation session with one of our advisors today.