Good day. In this module, we're going to talk about asset management. We're going to provide some definitions about asset management. What is asset management? The aim of asset management as a financial service is to increase the invested assets by means of financial instruments. So financial services institutions are basically investment banks on one hand, and asset management firms on the other hand. Investment banks, they trade a wide range of traditional products offering along with investment services. Whereas asset management firms, they offer private accounts for wealth investors, but they have limited power of attorney for portfolio managers. The term asset management refers to the financial service of managing assets by means of a financial instruments, with the aim of increasing the invested assets. Therefore, an asset manager is accompany whose business purpose is to managing wealth. Asset managers bundle a person savings and invest them as profitable as possible in the world economy. Asset management is the direction of all or part of the client portfolio by a financial service institution. Usually an investment bank or an individual investor offer investment services along with a wide range of traditional and alternative product, offering that may not be available to the average investors. Wealthy investors people have a private account with asset management firms. They deposit cash into their account, in some cases, with a third party if still young and the portfolio managers take care of portfolio using a limited power of attorney. Asset management companies, they take investor capital and put it in to work in different investments, like for instance, stocks, bonds, real estate, master limited partnerships, and private equity. These companies, handle investment according to an internally formulated investment mandate or process. Many asset management companies, they offer their services to wealthy business and individuals, because it can be difficult to offer services to smaller investors at appropriate price. Let's see more in details what asset management companies do versus wealth management. Asset management companies, they manage funds and clear the client accounts. Expert manage money and other clients' investments, for instance, they study assets, they offer planning and looking after services, they provide recommendations. On the other hand, wealth management companies they offer advisory services for investment management needs of affluent clients. They offer also consultation and discussion on financial needs and goals. The most significant difference between asset and wealth management, is the level of full gross in both departments. While asset managers are willing tend on taking care of the clients' investments, wealth managers take a broader look at the entire financial circumstances in order to optimize their money in a way that achieves individual goals and ambitions. There's also notable contrast in the result, that both approaches to record. Wealth managers typically focus on the preservation of a client's finance, while asset managers aim to produce tangible returns on investments. As the primary investment expert, asset managers typically offer in-house product and services and are more sophisticated in their approach towards maximizing the potential over assets. Whereas wealth managers are more process driven and aim more for synergy gains through a combination of various input from industry experts, clients attorney, accountants, and insurance agents among other figures. Asset management companies tend to be registered broken bidders and are required to only offer products that are deemed suitable for clients. While wealth managers firms are registered as investment advisers and have a finishers responsibility to uphold the financial assets of clients above their own. Before, asset management compensation tend to be more commission-based, whereas wealth management compensation models remain traditionally based on fees. Also asset manager's advice based on asset allocation, emerging market opportunities, risk return analysis, and portfolio strategies among other concentration. This means that asset manager is only focused on best way to strategically invest a client's money, while nitty-gritty of taxation, cashflow, and estate planning is left for the clients to figure out for themselves. On the other hand, wealth management takes a comprehensive view of the clients entire financial situation, specializing in giving advice for future planning. This makes wealth manager a particularly useful option for prospective clients approaching retirement age. In terms of level of focus on results, asset management produce tangible returns on investment and offer in-house products and services. On the other hand, wealth management, offers preservation of clients finance and maximizing the potential of the asset and involve industry experts, but also client attorneys, accountants, and insurance agents. Moreover, asset management companies, they're typically registered as a broker or as a dealer and they earn commission according to the services they offer, they receive fees. The advice of asset management companies is based on asset allocation, but also on emerging investment opportunities, risk return analysis, and portfolio strategy. On the other hand, wealth management companies, they are typically registered as an investment advisor. They obtained fee-based compensation with further fees for under management asset. Their advise is based on comprehensive view of a client's entire financial situation.
