Asset Management
Explanation: Asset management refers to the systematic process of developing, operating, maintaining, and selling assets in a cost-effective manner. In finance, it typically refers to managing investments on behalf of clients, including individuals and institutions. Asset managers make investment decisions to grow client portfolios while balancing risk and return.
Example: A high-net-worth individual hires an asset management firm to manage a $2 million investment portfolio. The firm invests in a diversified mix of stocks, bonds, and other securities, regularly monitoring and adjusting the portfolio to achieve the client’s financial goals.
Reference Link: For more information on asset management, visit Investopedia’s Asset Management.
FAQs:
- What services do asset managers provide?
- Services include investment advice, portfolio management, financial planning, and risk management.
- How do asset managers get paid?
- They typically charge a percentage of the assets under management (AUM) as a management fee, and sometimes performance-based fees.
- What is the difference between asset management and wealth management?
- Wealth management is broader, including financial planning, estate planning, and tax services, while asset management focuses on managing investments.
- Can asset management help with retirement planning?
- Yes, asset managers can help create and manage retirement portfolios to ensure long-term financial security.
- Is asset management only for wealthy individuals?
- No, asset management services are available to a wide range of clients, though minimum investment thresholds can vary.