When it comes to asset management, third parties make decisions related to the financial assets of an investor who authorizes them to do so. Investors make decisions about their financial assets to third parties and, usually, the asset manager receives an unlimited power of attorney. He or she invests capital but always considers the risk structure to achieve the highest possible returns.
There is a fundamental difference in other financial services that focus on advising and brokering financial investments such as funds or stocks. It offers asset management either by banks or independent individual or business administrators. It can address both private and institutional investors.
“Real” versus “Fake” asset management
This type of financial service is also referred to as “real” and “fake” asset management. Asset management is declared as the administration of individual assets of others invested in financial instruments. “Fake” asset management usually turns out to be real investment advice.
But, even if behind the offered asset management is simple investment advice, this is subject to licensing. Anyone offering public investment funds with a distribution license and calling themselves asset managers will not need additional licensing. People should be careful as an investor and build up a good relationship of trust with the portfolio manager.
Retail investors are not the same as personal
When it comes to high-amount personal asset management, people are investing vast amounts of money. Thus, only a wealthy clientele can use them. Nobody should have blind trust in the portfolio manager because poor results are easy to hide in asset management.
The individuality and discretion within the industry make comparisons pointing to the achieved performance hardly possible. Asset management is suitable for wealthy investors who value serious, very personal care. Especially in this area, the chemistry between clients and administrators must be on point.
In addition to the necessary fees, wealth managers may also ask for dependent fees and profit sharing or lump-sum fees. However, no asset manager is liable for losses. This is why people should use caution when considering a professional.
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