What's The Difference: Investment Vs. Asset Management?

Investment management and asset management are often used interchangeably, but there are some key differences between the two. While both aim to make money for their clients, asset management focuses on handling a client's physical assets, such as real estate, stocks, bonds, and other investments. Investment management, on the other hand, is a more general term for handling a client's investments and involves a variety of tools, knowledge and experience to ensure profitable returns.

Investment managers are financial professionals who use risk assessment to ensure their clients receive a profitable return

Investment managers have a range of duties and responsibilities, including:

• Evaluating economic risks: They review data and perform statistical analysis to understand the state of the economy and specific risks related to each client's target markets. This involves staying up-to-date with the changing economic climate to gauge risks and identify investment opportunities.
• Advising clients: They analyse data and provide recommendations on investment opportunities that may be profitable. Investment managers use their expertise to guide clients towards lucrative investments suited to their risk tolerance and financial goals.
• Compiling investment reports: Investment managers keep their clients informed by preparing financial reports detailing the performance of their investments. These reports help clients make informed decisions and assess whether adjustments to their investment portfolio are necessary.
• Changing investments based on profitability: By analysing the profitability of each investment, investment managers decide whether to retain or replace it with a more profitable alternative. They continuously monitor investments and make adjustments to optimise returns and manage risk.
• Setting investment goals: They work with clients to define clear investment objectives and develop strategies to achieve those goals. This involves understanding the client's risk tolerance and financial objectives to create a tailored investment plan.
• Analysing the market: Investment managers evaluate market conditions, external and internal forces, and economic factors that can impact investments in the short and long term. This analysis helps them make informed decisions and anticipate potential risks or opportunities.
• Communicating with clients: They maintain open communication with their clients, providing updates and taking immediate action if an investment is underperforming. Effective communication ensures that clients are well-informed and involved in the decision-making process.
• Assisting with corporate financing: Investment managers help corporate clients with their financing requirements, including complex financial transactions and corporate financing. They provide expertise in navigating intricate financial processes.
• Underwriting securities: They also assist in underwriting securities that have been newly acquired by their clients.

Investment managers work with a diverse range of clients, including individuals and businesses of varying income levels. They are skilled in evaluating and managing risk, utilising data-driven insights, and creating customised financial plans for their clients. By employing these strategies, investment managers strive to ensure their clients receive profitable returns on their investments.

Asset managers focus on handling a client's physical assets

Asset managers are financial professionals who analyse, collect, and handle a client's financial portfolio. They focus on specific asset investments, such as real estate, stocks, bonds, exchange-traded funds, and fixed-income securities. Their goal is to increase returns from client investments and restructure them when needed to gain their clients more profit.

Asset managers work with clients to handle their investments, which can include a wide range of assets from real estate to stocks and exchange-traded funds. They carefully manage current investments, monitoring their performance and future prospects, as well as seeking out new investment options. They assess risk, continually look for new opportunities, and communicate with clients about their investments.

As detail-oriented professionals, asset managers have a depth of experience in markets. They make decisions on behalf of their clients and are required to do so in good faith. They have a fiduciary responsibility to act in their clients' best interests.

The management of physical assets involves maintaining and managing these assets to provide maximum value to the owner. This includes tangible assets, such as properties, equipment, and commodities, as well as intangible assets like patents, trademarks, and copyrights. Tangible assets often depend on physical characteristics and market conditions, while intangible assets require a focus on legal protections and leveraging for financial gain.

Asset managers help clients achieve their financial goals by growing their wealth over time. They employ strategies like asset allocation and portfolio management to manage risks and meet investment objectives. They provide regular updates and reports about the performance of the assets.

Investment managers work with clients of all income levels

• Evaluating economic risks: Reviewing data and performing statistical analysis to understand the state of the economy and specific risks related to each client's target markets.
• Advising clients: Analysing data and recommending investment opportunities.
• Compiling investment reports: Keeping clients informed about how their portfolio of investments is performing.
• Profitability forecasting: Analysing and maintaining/adjusting a client's investment portfolio based on projected profits.

Investment managers have a more narrow focus than asset managers, as they are only responsible for managing a client's investment portfolio. They strive to balance the potential for return against the risks associated with different investments, aiming to achieve the best possible outcome for their clients.

Investment managers often use strategies such as financial analysis, asset selection, and plan implementation. They monitor investments and make adjustments based on market conditions and the client's changing needs and goals. Their role is to create a well-structured portfolio that matches the client's risk profile and investment objectives, optimising the potential for return while minimising risk.

While asset management is part of investment management, the latter is more all-encompassing. Investment managers will work to make the most of your money, incorporating tactics for qualified educational or medical transfers. They have years of experience and data-driven insights that protect you from making poor or emotionally biased investment decisions. Each investor should have a customised financial plan that is regularly revisited.

The benefit of hiring a professional to take care of investment and asset management together is that you'll end up with a well-rounded portfolio without any legal worries.

Asset managers tend to work with clients with extensive amounts of money

Asset managers work with their clients to determine their financial needs and goals, and develop strategies to meet those goals. They assess the risks associated with their clients' assets and make investment decisions on their behalf, always aiming to increase the value of their clients' investment portfolios. They also provide regular financial reporting and updates to their clients, keeping them informed about the performance of their investments.

In contrast, investment managers have a more general focus. They work with a broader range of clients, including individuals and businesses of all income levels, and are responsible for managing their clients' investment portfolios. Investment managers use risk assessment and financial analysis to ensure their clients receive profitable returns on their investments. They advise clients on investment decisions, selecting the right mix of assets to meet their specific investment goals.

While there is some overlap between the roles of asset managers and investment managers, the key difference lies in the scope of their work. Asset managers have a broader focus, managing all of a client's assets, while investment managers have a narrower focus, managing only the investment portfolio. As a result, asset managers tend to work with clients with larger amounts of money to invest, ensuring that their wealth is effectively managed and grown over time.

Investment managers may also be called portfolio managers or financial advisors

Investment managers, also known as portfolio managers or financial advisors, are individuals or organisations that provide financial advice and handle activities related to financial planning, investing, and managing a portfolio for their clients. They are responsible for safeguarding their clients' investments and ensuring returns. This involves evaluating economic risks, deciding on investments, preparing investment reports, and changing investments based on profitability.

Portfolio managers specifically advise on securities and help create and maintain investment accounts, while financial advisors offer more holistic advice on topics such as budgeting, debt management, tax management, retirement planning, and estate planning. Financial advisors assess their clients' overall financial standing, goals, preferences, and risk tolerance to offer comprehensive advice.

It is important to note that the terms "investment manager", "portfolio manager", and "financial advisor" have distinct meanings and responsibilities, but they all play a crucial role in helping individuals and organisations manage their finances and investments effectively.

Frequently asked questions