The process of managing your money is often more complex than it may initially seem. However, you can be successful in your current and future financial decisions if you seek help from knowledgeable professionals. Whether you’re planning for retirement or simply wish to learn more about how to manage your money, you may be considering assistance from an asset manager or wealth manager. Nevertheless, these two types of managers are notably different, despite how similar their titles sound. Here is a close look at the differences between asset management vs wealth management.
What Is Asset Management?
Before defining “asset management,” it’s first important to understand what an “asset” is. An asset is any type of financial holding you own, such as bonds, stocks, mutual funds, and exchange-traded funds (ETFs). (Note: Investments like your home and car are also considered assets, but not all asset managers deal with this type of property.) Asset management is specifically designed to handle your investments and help them grow. There are different types of asset management, including Infrastructure Asset Management, Enterprise Asset Management, IT Asset Management (ITAM), Fixed Asset Management, and Digital Asset Management (DAM).
An asset manager can assist you with asset allocation or with the process of categorizing investable assets into different “classes.” This involves deciding what proportion (%) of your portfolio will consist of fixed-income products (e.g. bonds) and what proportion will be growth products (e.g. stocks). Some asset managers also help with basic tax-loss harvesting, which is a method investors use to capitalize on losses in order to offset capital gains on other types of investments. Asset managers are typically compensated with commissions or fees that are based on a percentage of the assets you keep under management. According to asset tracking system GoCodes, the asset management system market is forecast to grow to over $27 billion by 2025 (compound annual growth rate of 10.3% between 2020 and 2025).
What Is Wealth Management?
Wealth management is much broader than asset management because it involves analyzing someone’s overall financial state and then taking measures to optimize and protect their wealth in the long term. Wealth management services also tend to be more fiduciary than asset management services because of the sensitive nature of the financial items and information involved. A “fiduciary” is legally obligated to act in someone’s best interests and ensure there are no conflicts of interest in someone’s financial decisions.
Wealth managers generally offer services such as tax planning, estate planning, legacy planning, education planning, retirement planning (including benefit choices), trust management, risk management, charitable donations, stock option planning, hedging derivatives, venture capital investment, and insurance. These professionals normally earn money via a percentage of assets under management. However, some merely receive an hourly or flat fee. According to Allied Market Research, the global wealth management market is expected to balloon to $3.43 trillion by 2030 (for a CAGR of 10.7% between 2021 and 2030). Per the Boston Consulting Group, there were $89 trillion worth of assets under management worldwide in 2019.
How Do I Get Asset Management Vs Wealth Management Services?
There are several ways you can find asset management vs wealth management services. For example, you can ask a friend or relative for advice. No matter who you choose to help you, be sure it’s someone who has specific experience with money management. Ideally, you should choose a professional who has previously served clients whose financial situation is similar to yours.
You can also use a financial advisor matching service provided by a reputable company that offers asset or wealth management services. In any case, it’s highly recommended that you start investment and wealth planning as early as possible.
Speak To The Experts At Inflection Advisors
Reach out to the professionals at Inflection Advisors to learn more about the differences between asset management vs wealth management and thereby determine which services you need. We’re a fee-based financial advisory firm dedicated to serving clients throughout Los Angeles. We strive to form long-lasting relationships with all of our clients, regardless of their financial situation, needs, and goals. Our five-step process for financial growth consists of an investigation stage (involving data collection), an analysis stage, a recommendations stage, an implementation stage, and a routine monitoring phase.
Whether you’re planning for retirement, succession, or your children’s education, Inflection Advisors is here to help you make sound, informed decisions about your financial present and future. Call Inflection Advisors at contact us online for more information about our services.
