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Investment Management and Wealth Management – It is easy to get confused with these terms, especially since they are often misrepresented. What do they really mean, what are the main differences and which one might be best for you?
What is money management?
Wealth management looks at a person’s finances as a whole and how they can be managed to achieve their long-term financial and personal goals. In addition to handling clients’ investments, wealth management includes a broad set of services such as legal planning, insurance, accounting and financial, charitable giving and tax advice.
There are higher minimum asset limits, and one can expect to pay higher fees for a more comprehensive service. However a good manager can justify this through the savings their service provides.
Benefits of Money Management
Since money managers provide many of the services of an investment manager, their clients receive the same benefits. However, the additional services offered mean that wealth management can provide even more benefits.
coherent strategy
Since Wealth Management looks into all aspects of the clients’ financial affairs, it aims at providing a custom-built strategy for realizing their objectives. For example, by combining various services, a wealth manager can find the best way to pay off a mortgage or plan for retirement while avoiding tax inefficiencies or undue risk.
This holistic approach attempts to understand and predict how the different areas of a person’s finances interact and organize them appropriately.
Simplicity
A wealth manager can provide a single focal point for all financial matters. For example, instead of a wide range of advisors, a wealth manager may replace the need for a separate financial planner or investment manager.
The breadth of their knowledge also means they can act as a guide for those less familiar with the practices and technical language associated with financial services.
What is investment management?
The primary role of an investment manager is to advise on, organize and grow clients’ investments.
After discussing a client’s financial goals and acceptable risk levels, an investment manager designs a portfolio of investments tailored to their needs. They will then keep clients updated on the status of their portfolios, make recommendations and implement changes.
Benefits of Investment Management
investment Management The services sometimes require a minimum investment and come with a fee – typically a small percentage of assets under management. However, they can provide several benefits.
low risk
With an investment manager building a diversified portfolio, the assets are less sensitive to individual investment fluctuations. With hundreds of smaller investments likely to be spread across different industries and asset classes, if one underperforms, the others are likely to compensate.
Facility
If customers wish, they can access a wide range of investments with minimal effort, making it ideal for individuals short on time. As the paperwork and day-to-day running is taken care of, much of the stress of investing is taken away.
high returns
The biggest advantage is that you can get the knowledge of professionals. The best investment managers often have vast experience and a worldwide network that can help them identify the best opportunities and reach better results.
Investment managers also have capabilities that most individual investors do not. For example, they can increase their buying power by pooling together several clients’ assets, allowing each to benefit from higher yields.
Which is best for you?
Which service is the best fit will largely depend on your net worth and the type of assistance you need. While a wealth manager provides more services than an investment manager, it is generally only available to, or required by, the most affluent clients, with even the wealthiest clients receiving fee waivers. .
So, if you just want to watch your investments grow, without the hassle and risk of handling it yourself, availing the services of an experienced investment manager can prove useful. However, for those with a high net worth and complex financial situation, comprehensive methods of wealth management may be the best solution.
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