Asset Management vs Wealth Management
Financial management considering long-term goals in mind can seem overwhelming. But with a financial advisor by your side, you can easily understand what pathway to choose and what best suits your needs.
People often get confused while choosing between asset management vs wealth management. Even though these leading services feel similar, they are two very different offerings. Asset management revolves around your investment portfolio, while wealth management is a comprehensive service that involves everything from your estate, college savings, investments, retirement savings and more.
In this article, we will break down the difference between asset management vs wealth management, their preeminent purposes and goals so that you can choose your right.
What is Asset Management
Like its name, asset management means the management of all your assets. This includes all your financial holdings like stocks, bonds, mutual funds, ETFs and other prominent investments. Unlike wealth management, asset management only focuses on your investments – the wealth you’re trying to grow for a secured future.
Having an asset manager by your side will help you determine which investments best suit your current or future financial scenario. They will assist you with asset allocation and guide you to divide your investable assets among different asset classes.
You do not want to put all your eggs into one basket. Therefore it is crucial to determine what percentage of your investments should fall within growth products, like stocks, and what percentage should be fixed-income products, like bonds.
Asset management is applicable to tangible (property, gold) as well as intangible assets (human capital, intellectual property). After all, it is a systematic process of developing, operating, maintaining, upgrading and disposing of assets in a way that is of great advantage to you.
Profiles with simple financial scenario
Profiles with complex and financial scenario and more complicated assets
Focuses only on managing your assets
Focuses on managing your entire financial picture
Risk assessment, asset allocation, tax minimization, investment monitoring, portfolio rebalancing
Investment management, cash flow and debt management, retirement planning, education planning, insurance planning, estate planning
What is Wealth Management
Wealth management is a comprehensive service that considers all aspects of your financial situation. What is your and your family’s financial situation? What steps should you be taking to maximize wealth and protect it? Wealth management covers all these aspects.
From tax planning to retirement, this service covers all your needs in one. A wealth manager will assist you in:
- Tax planning
- College Savings
- Estate planning
- Retirement planning
- Charitable giving
In a nutshell, asset management narrows down to growing finances, while wealth management has a broader view. It looks at your financial situation from the past, present and future lens and then takes proactive steps to ensure your wealth gets protected in the long haul.
Tips to find an Asset or Wealth Manager
At Capital Growth, we understand that finding an asset or wealth manager with whom you can work long-term is no easy feat. Our team has put together the list of tips below to help you guide through this process.
Tip #1: Strength and experience of the financial advisor
Take time to learn how experienced are the key players of the firm you’re planning to choose and how diverse their backgrounds are. It’s better to let a seasoned investment professional with diverse portfolio experience manage your wealth, as they can bring different perspectives into play.
Tip #2: Duration of performance track record
Consider how long the fund has been in existence. It is tricky to determine the level of risk involved and the future viability of new funds. For funds that are newly created, no historical data is available to examine their performance relative to long-term market trends.
Tip #3: Portfolio manager’s tenure at the firm
When a financial firm sells you on a fund’s track record, you might want to check the portfolio manager’s tenure with it. For how long the current portfolio manager has been leading the fund? Does the track record represent the efforts of several different portfolio managers with potentially different investment styles over time? By getting all these answers, you will be able to gauge the fund’s ability to continuously carry out strategies that have brought proven results in the past.
Tip #4: Check out your wealth management options
It is vital that you research your options before committing your hard-earned capital.
A wealth management firm will be offering several services under one umbrella. Taking the time to study those offerings in detail will give you various potential ideas to invest your hard-earned capital. Do your research before committing to anything and feel free to ask as many questions as you have.
Tip #5: Level of Assets under Management
How significant is your capital to the investment firm from a client servicing perspective? Often, there is a direct correlation between the level of attention your portfolio receives to the firm’s ability to give you top-notch service.
While there are benefits of choosing a large AUM because of its ability to scale, smaller boutique firms can be more agile in the market and should be able to offer customized attention to best suit your needs.
- The US Asset Management Market is growing at a CAGR of >5% over the next 5 years.
- People have started investing more and more in assets as a passive source of comparatively high income.
- Increased Demand in Investments by people is surely a key market trend for the asset management market in the US.
Asset Management vs Wealth Management: What’s Right For You
Whether you should dive into asset management vs wealth management depends on several factors, from your collective assets to your financial goals. The best approach is to sit with a financial advisor and understand what solutions will work best for you.
Planning your wealth is a strategic approach that will drive your results in the long run. Take charge of your financial situation now to reap the benefits later. Get in touch now.
Financial Planning Is Simple with Capital Growth
Are you ready to invest in your future? Consult Capital Growth Inc, San Diego’s financial experts, to set out on your personal plan towards financial freedom.
Consider the investment objectives, risks, charges and expenses before investing in a 529 College Savings Plan. Investments in a 529 plan are neither insured nor guaranteed and there is the risk of investment loss. This material is not intended to be construed as tax or legal advice. Always consult your tax and/or legal professional for details regarding your specific situation.