Investment Management: 5 Key Must-Knows

Which type of investment management professional is right for you?

If you are beginning your search for a financial advisor specializing in private investment management, understanding your options is key. We’ve created a guide to help you explore how to find the best investment firms for high-net-worth individuals managing portfolios of $500,000 or more. This information is designed to equip you with the knowledge needed to make informed decisions as you plan for long-term financial stability.

A financial plan is typically developed around an investor’s short- and long-term financial and lifestyle goals. This plan outlines recommendations for how and where your portfolio should be allocated. Investment managers then implement the plan by placing your assets into a range of investment options, including mutual funds, stocks, and money markets, and actively managing those assets over time to pursue growth and meet the plan’s objectives.

While many investment managers also serve as financial advisors or wealth managers, not all financial advisors provide investment management services.

What Is Investment Management?

The investment management industry includes a wide range of sectors and specialized services.

At its core, investment management involves an investment advisor managing your portfolio on an ongoing basis—making trades, buying and selling equities, mutual funds, bonds, and other assets—to help position your holdings for long-term growth or other specific investment objectives.

Investment management plays a vital role in supporting financial stability for individual investors, businesses, pension funds, and other large entities.

Some larger investment firms and commercial advisors may also offer additional financial services such as tax accounting, budgeting, and personal banking. However, independent wealth managers tend to focus specifically on helping high-net-worth individuals pursue their long-term financial goals.

Learn about why the distinction between high-net-worth and ultra-high-net-worth investors matters.

A key part of private investment management is maintaining strong client relationships and providing ongoing portfolio management as life circumstances and market conditions evolve.

Investment managers may work with individual investors, but typically serve clients who have significant assets to invest. Wealth managers represent a specialized area within investment management, focusing exclusively on the needs of high-net-worth individuals. In addition to individual portfolios, investment managers often serve institutions such as universities, foundations, pension funds, and insurance companies.

It’s important to note that investment management is distinct from investment banking, which primarily serves corporations and larger entities rather than individual investors.

5 Basics of Investment Management

Investment managers provide a range of services, advice, and planning strategies, including but not limited to:

1– Managing Asset Allocation

Asset allocation is often considered the most important element of an investor’s financial plan. Learn six key reasons why asset allocation matters. If the allocation is misaligned, even strong market conditions may not be enough to prevent underperformance within an investment management portfolio.

2 – Financial Portfolio Analysis

As part of building a client’s financial plan, an investment advisor typically conducts a detailed review of personal financial statements and holdings across various accounts and funds. The insights gained from this portfolio analysis help guide adjustments that support the investor’s long-term financial objectives.

3 – Strategic Portfolio Planning

Rather than focusing on offering more investment products, experienced fee-based investment advisors prioritize data-driven strategies that align your portfolio’s returns with your desired lifestyle goals.
For example, if you aim to set aside $500,000 for your grandchildren’s education, a carefully constructed private investment management plan can help position that fund for greater security.

4– Selecting and Distributing Investments

Once the overall investment management plan and personal goals are established, advisors work to select specific equities, mutual funds, bonds, commodities, and other holdings suited to the investor’s needs.

Effective selection must balance opportunities for growth with a disciplined approach to risk management. While a certain amount of risk is essential for optimized returns, excessive exposure can threaten portfolio stability and long-term retirement plans.

5– Monitoring and ongoing adjustment

Over time, investment managers regularly review and adjust portfolio allocations to keep the strategy aligned with the original financial plan.
A useful analogy is a long-haul flight: while the destination remains clear, small course corrections are needed throughout the journey. Similarly, ongoing portfolio adjustments ensure you stay on track toward your investment goals, avoiding unintended deviations that could impact outcomes.

Without professional oversight, timely insights, and structured planning, navigating complex financial markets becomes more uncertain, increasing the risk of falling short of your retirement or wealth preservation targets.

These are the foundational aspects of investment management.
As we continue, we’ll explore how private, independent investment firms differ from larger institutions—and why that distinction may be important when choosing the right fit for your portfolio.

Do You Need an Investment Management Firm?

What type of individual client or institution may benefit from working with an investment manager?
Generally, the more complex your financial situation—and the greater the value of your assets—the more important professional private investment management becomes.

What does “complexity” mean?
It does not refer to out-of-control investments, hedge funds, or falling behind on payments. Financial complexity, sometimes called “portfolio overwhelm,” arises when investors face challenges in managing multiple accounts, such as banking, retirement savings, pension funds, mutual funds, and stock portfolios.

It often means struggling to maintain a clear, consistent approach to growing assets methodically, with confidence that financial goals and lifestyle outcomes remain on track.

Investment management is not a one-time event.
It requires continuous planning and adjustment. Every month, new capital may enter your financial ecosystem, requiring careful decisions:

• Where should you invest new funds?
• How much should be allocated to each account or investment?
• How do you maintain an asset allocation that aligns with your goals and risk tolerance?
• Should you rebalance by selling equities and bonds or by contributing additional capital?
• How frequently should rebalancing occur?
• If you need to withdraw funds, which accounts should you prioritize?
• How can you minimize taxes and avoid unnecessary penalties?
• How can you manage investment costs to preserve long-term growth?

These questions often become even more critical during retirement, when factors such as required minimum distributions (RMDs), healthcare costs, and market volatility play a larger role in financial planning.

10 tax planning strategies for high net worth portfolios

For individuals managing significant assets, working with independent investment firms or fee-based investment advisors can help structure and protect wealth over the long term.

Selecting a financial advisor experienced in private investment management is a proactive step in helping align your portfolio with your evolving goals.

Advantages of Private, Independent Investment Management Firms

The best investment management firms to consider—especially for high-net-worth individuals—are often private, independent firms. Unlike large investment companies, private firms may offer greater flexibility, transparency, and client-centered service. Here are a few reasons why:

1. Fewer Conflicts of Interest

Publicly traded investment management firms have multiple layers of administration and shareholders to serve, which can result in higher fees or less transparency around cost structures. Even when large firms advertise low or no fees, other charges or indirect costs may still apply.

Explore 8 ways non-fiduciary advisors could impact your portfolio

2. Focused Expertise

Many large firms employ newer professionals as part of training programs, offering broad financial planning services. While these roles are important, they may not always align with the highly specialized needs of high-net-worth investors.

However, not every independent firm guarantees deeper expertise. It’s important to work with an investment manager who carefully studies your personal financial situation, designs a plan based on your goals, and strategically selects investments—such as equities, mutual funds, bonds, and other assets—to support those objectives.

3. Significant Time Savings

As personal wealth increases, managing investments becomes increasingly complex and time-consuming. Activities like analyzing financial statements, rebalancing portfolios, coordinating estate and retirement planning, managing real estate sales proceeds, and planning for required minimum distributions (RMDs) can demand significant attention.

Learn about 7 estate planning trusts that can help protect your wealth.

Working with an experienced investment manager can help streamline these responsibilities, allowing you to focus more time on enjoying life, confident that your financial strategies are being monitored and adjusted as needed.

4. Holistic Family Financial Planning

Independent wealth managers often offer services beyond portfolio management, helping clients coordinate tax planning, estate strategies, retirement preparation, and philanthropy planning. These services aim to protect and grow multi-generational wealth while aligning with broader family and lifestyle goals.

5. Customized Financial Planning and Ongoing Asset Management

Large institutions often rely on standardized investment programs that may not fully adapt to an individual’s evolving circumstances. While some degree of customization exists, it can be limited by pre-set systems and frameworks.

Consider, for example, a major life event requiring early retirement or a change in business ownership. Personalized investment planning allows for dynamic adjustments to your risk management strategies and portfolio allocations, keeping you aligned with your updated financial realities.

Explore 4 challenges large firms face when serving ultra-high-net-worth clients.

A customized investment management approach is particularly valuable in helping high-net-worth individuals adapt to unexpected shifts without being restricted by rigid institutional processes.

How Big Portfolio Management Firms Work

If you seek services from a large investment management company, the consultation process tends to be fairly standardized and often includes:

– Limited array of asset distribution options (“high risk,” “moderate risk,” etc.)
– Standard questions they ask everyone
– Blanks to be filled in
– Check boxes to check
– Gathering your account and finance information, such as savings, debt, mortgage, investments, Roth IRA, pension funds, and mutual funds
– Inputting your personal finance data into a computer
– Telling you about their services and the automated reporting you’ll receive (designed to minimize direct interactions)
– Projections estimating how your investments may perform over 20–40 years based on average market growth rates

At large firms, your investment goals, lifestyle aspirations, and financial situation are generally fitted into pre-designed systems. While any unique circumstances may be acknowledged respectfully, they typically do not alter the core process.

For many investors, this approach is sufficient. However, high-net-worth individuals who seek more dynamic strategies and personalized portfolio management may find it limiting.

Independent investment management firms, by contrast, often utilize large custodians to securely hold client assets while managing the investment strategies separately. This structure ensures that client funds are protected by a third party, adding an important layer of security.

While many large custodians are reputable, it is important to note that a firm’s size—measured by assets under management (AUM)—may not reflect the level of service offered. For example, one major custodian’s average account value is approximately $22,000, which highlights that much of their AUM comes from smaller investor accounts.

In managing the complex financial needs of high-net-worth individuals, large firms often lag in delivering tailored portfolio customization, responsive investing, or concierge-level services.

What Most Large Investment Management Firms Cannot Do

The largest companies in the investment management industry are typically not structured to meet the unique needs of high-net-worth individuals, who often face more complex investing challenges and expectations.

No Solutions or Strategies for Your Biggest Questions

High-net-worth investors—many of whom also own businesses and real estate—often have critical financial questions such as:

– Can I really retire at age 50?
– How much money should I set aside for unplanned major expenses?
– Will my passive income and investment growth be enough to sustain my lifestyle?
– Are hedge funds and private equity good investments? Why or why not?
– Should I sell one of my properties?
– Should I sell my business?

These are the questions that matter most.

An investment advisor cannot effectively address these complexities by simply filling in blanks or checking standard boxes. They require an adaptable, customizable strategy that begins with listening and incorporates every possible solution into the investment process.

Suppose your investment manager presents two projections for future returns: a lower-risk asset allocation with a projected 6% annual growth rate and a higher-risk allocation with a projected 9% growth rate. Without deeper analysis, how do you know what either option really means for your financial future? Is the higher return worth the additional risk, especially during periods of economic downturn?

Most investment managers at large institutions, when faced with these difficult questions, will offer vague answers such as “it depends” or “it’s hard to say for sure.” While technically true, such responses leave clients without the clear, data-driven guidance they deserve.

Given the stakes involved, a manager who employs evidence-based strategies can provide more meaningful support, helping clients navigate critical investment decisions with greater confidence.

No Customized Response to Market Volatility

What happens if the market crashes right around the time you retire? What if it remains depressed for several years? Or what if it fluctuates unpredictably for a decade, barely achieving any growth?

These scenarios are not theoretical—they have all occurred since the year 2000.

When it comes to responding to market volatility, the actions you take matter. Should you adjust your asset distribution? Increase your bond holdings? Sell certain securities? Shift into different mutual funds? Convert a pension fund into a Roth IRA? Should you buy or sell real estate, adjust your lifestyle expenses, or reconsider your risk tolerance?

The critical question remains: how do you know what adjustments are the right ones?

The reality is that almost no investment managers—particularly those at large Wall Street institutions—have a customized, data-driven strategy ready to deploy during periods of market volatility. Most operate without a coherent, client-specific philosophy for adapting when timing is crucial.

Consider the early months of 2020, when markets sharply declined following the onset of the coronavirus pandemic. Within a few months, the markets had rebounded significantly, including two of the largest single-day rallies in history. Had you been advised in March 2020 to exit the markets entirely, you would have missed out on much of the rapid recovery.

A strong investment management approach requires more than generalized advice to “wait it out.” It demands proactive research, flexible strategies, and real-time analysis to protect and advance your long-term financial goals—especially during times of uncertainty.

How Much Do Investment Managers Charge?

Upfront fees charged by advisors in the investment management industry typically range from nearly 0% to 2% annually for private investors, with the most common fee structure around 1% of the portfolio’s value each year.

Many wealth managers apply a sliding scale, where the percentage fee decreases as the size of the investment portfolio increases. This fee-only practice is common among independent advisors focused on maintaining transparency.

However, upfront fees are not always the only costs to consider. Some investment management firms earn additional revenue through commissions, incentives, or internal investment product fees. As a result, a manager advertising a 0.4% annual fee may have other income streams that significantly impact the total cost to the investor.

Here are six additional costs and hidden fees that, when combined, can easily surpass the stated management fee, particularly if multiple layers of fees are involved.

How to Find the Best Wealth Manager

Finding the right investment manager can be challenging for several reasons. First, regulations restrict investment advisors from using testimonials or showcasing performance data from specific clients, limiting the type of information that can be shared publicly.

Second, while many investors feel satisfied with their advisors, they may not always be aware of better opportunities or approaches they could be missing. Relying on recommendations from friends, family, and colleagues can be a helpful starting point, but it often provides only a partial view of what is available.

Third, online searches and marketing materials can present claims that are difficult to verify without professional guidance. Navigating the financial advisory landscape requires discernment, as not all available information is equally reliable or transparent.

Given these challenges, how can you find the best investment manager for your needs?

A practical approach begins with three essential steps:

1. Clarify your financial goals, hopes, and personal investment philosophy.
2. Research firms that align with your objectives based on available information.
3. Speak directly with prospective advisors to assess their investment strategies and planning processes.

Having a conversation with an advisor remains the most effective way to determine if they are the right fit. The most critical factor to explore is their philosophy and methodology for portfolio planning and investment management.

What Do You Study in Investment Management?
Investment management focuses on creating strategies for acquiring and managing assets to help investors meet their financial goals. A strong understanding of banking, budgeting, taxation, and asset allocation is essential.

What Skills Are Needed for Investment Management?
Investment management requires an interest in finance, strong analytical and reasoning abilities, effective communication skills, and problem-solving capabilities.An Approach Focused on Comprehensive Strategy and Resilience
A sound investment strategy goes beyond basic projections. A rigorous, proactive process often includes three components:

1. Stress Testing Portfolios Against Historical and Hypothetical Scenarios

Understanding how an investment portfolio would have performed during past financial crises—such as the inflation of the 1970s, Black Monday, or the dotcom crash—provides valuable insights. In addition, applying thousands of hypothetical “what if” scenarios, based on real historical data, can help assess how a portfolio might respond to future, unpredictable events.

2. Assessing Portfolio Resilience (Comfort Status)

If a portfolio is projected to exceed all desired lifestyle outcomes in 75–90% of stress tests, it reaches what some investment managers call a “Comfort Zone.” Portfolios that fall outside this range can be adjusted through controlled variables—such as modifying planned expenses or legacy gifts—to reestablish long-term security.

3. Ongoing Investment Management and Plan Adjustments

Maintaining portfolio resilience requires continuous attention. Regular updates to financial plans, quarterly asset rebalancing, and ongoing stress testing are essential to keeping portfolios aligned with evolving goals and market conditions.

Finding the right investment manager is an important step toward achieving long-term financial security. Whether you are seeking personalized advisory services, planning for wealth preservation, or exploring new investment strategies, having the right team on your side makes a difference. 

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