Asset management and investment management are important concepts in a smartly crafted wealth management strategy. While they are often considered interchangeable, each serves a distinct purpose in managing and growing financial resources.
When It comes to your long-term financial goals, your initial conversation with a wealth management specialist like Saddock Wealth may include these terms. Accordingly, it’s helpful to have a foundational understanding of asset and investment management and, most importantly, how they differ. This understanding will lend itself to a deeper appreciation of which approach might work best for your unique financial situation and long-term objectives.
What is Investment Management?
Investment management is the professional handling of various assets and securities to meet specified investment goals. It includes many moving parts. For example, investment management can include creating a portfolio, ensuring diversification through multiple strategic investments, and adjusting your portfolio and investments based on market trends and opportunities.
Key Focus Areas
Investment management is about long-term growth and maximizing investment returns while minimizing risk. An investment manager constantly monitors a client’s portfolio throughout a lifetime to ensure that the returns align with the investor’s long-term financial goals. Investment management is never a one-time, stagnant process, and it requires detailed and routine review to ensure that an investment portfolio is as strong as possible.
What is Asset Management?
Asset management is similar to investment management but includes the strategic oversight of a client’s tangible and intangible assets. Unlike investment management, which focuses on equities, bonds, mutual funds, and similar investments, asset management takes a broader approach. It includes alternative investments that are not necessarily influenced by the market. These can consist of real estate, collectibles, intellectual property, and other financial assets.
Key Focus Areas
Like investment management, the critical goal of asset management is to preserve value, manage risks, and optimize the overall performance of your assets. In the asset management arena, your wealth management specialist will incorporate non-financial assets into your wealth strategy. For example, your asset manager may create a portfolio that includes rewarding equities, bonds, and mutual funds. However, your portfolio will also include alternative investments generally unaffected by market changes, such as real estate.
Investment Management vs. Asset Management
The Key Differences
The primary difference between investment management and asset management is scope. Investment management focuses on financial securities and returns. In contrast, asset management includes the evaluation and assessment of a broader range of asset types.
Asset management is often recommended for preservation-focused strategies, especially for clients who already have a diversified portfolio with several alternative assets, like real estate and collectibles. Investment management is focused on growth and reaching an investor’s goals—like ensuring a comfortable retirement—in a designated period.
Similarities and Overlap
It’s important to note that investment management and asset management have several underlying similarities. Both strategies focus on achieving financial security for their clients by mitigating risk and identifying opportunities for economic growth.
You may find that your needs change as your financial situation evolves over the course of a lifetime. For example, a young professional may initially be focused on investment management to grow their wealth. On the other hand, a seasoned professional may be more focused on preserving and steadily growing their assets to ensure they have a thriving legacy to leave to loved ones.
The best wealth management firms will work with you throughout these evolutions. They will offer new strategies and help you implement them as your financial circumstances change and new opportunities to meet your goals arise.
Wealth managers are effective financial architects who balance growth with preservation. To that end, a unified investment and asset management strategy is the best way to capitalize on opportunities as you navigate varying financial goals and life stages.
Why Choose Saddock Wealth for Your Wealth Management Needs?
The best option for optimal wealth management is an expert firm that understands the nuances of weath management. This is where Saddock Wealth shines.
Wealth management is not a one-size-fits-all approach. It is a dynamic process that requires continual adaptation to achieve the greatest success. Each wealth management strategy is tailored to meet the unique needs of our clients, with ongoing reviews and adjustments to ensure their financial security and growth remain at their peak every step of the way.
Reach out to us today to start the conversation, and we’ll work together to identify the best wealth management strategies for your long-term ambitions now and in the future.