Investment and Asset Management: Differences Explained

Investment Management vs. Asset Management: Which is Best for You?

Do you know the difference between investment management and asset management? Many people use the terms interchangeably, but there are some key differences. 

If you’re building a healthy savings account and looking to optimize it for later in life, it’s important to understand your options thoroughly. Read on to learn more about investment management vs. asset management, the roles of investment and asset managers, and which may be the best for you.

What is Investment Management? 

As your personal or company wealth grows, it should be invested wisely to ensure stability and maximum return. While asset management is part of this, investment management is much more all-encompassing. It’s not necessarily a case of choosing between asset management vs. investment management. Still, you need a firm understanding of the differences so you can hire the right people to protect and develop your capital. 

An investment manager’s job is to safeguard all of your investments to ensure returns. In addition to asset management, an investment manager will work to make the most of your money, incorporating tactics for:

  • Insurance relief
  • Retirement planning
  • Estate planning
  • Minimal taxation
  • Philanthropy
  • Qualified educational or medical transfers

The benefit of hiring a professional to take care of investment and asset management together is that you’ll end up with a well-rounded portfolio without any legal worries. After all, the financial landscape is constantly shifting. As a result, it’s not always feasible that busy professionals have time to stay on top of changing legislation and manage their own investments. Another benefit is that investment management/manager professionals have years of experience and data-driven insights that protect you from making poor or emotionally biased investment decisions. 

Each investor should have a customized financial plan that is revisited regularly. Because of this, many people prefer investment management vs. asset management.  This is because they see it as a more rounded and risk-averse portfolio solution. 

What is Asset Management?

An asset manager is responsible for handling investments on behalf of individuals and companies. But what is the difference between an asset vs. investment? 

Assets comprise the elements of investment portfolios that have tangible monetary value. When managed properly, these can accrue additional value over time. In other words, the main difference between asset management and investment management is that asset management does not encompass techniques to make savings on tax or donation-based financial activities, etc.

It focuses purely on the continual accrual of value through financial instruments like:

  • Stocks
  • Bonds
  • Real Estate
  • Mutual funds
  • Exchange-traded funds (ETFs)
  • Fixed income securities
  • Commodities
  • Cryptocurrency

While personal services are sometimes available, many asset management companies work primarily for trust funds, charities, and large institutions. Unlike Registered Investment Advisors (RIA) in the investment management sector, they are not legally required to put their client’s financial interests ahead of their own.  As such, sometimes, asset opportunities are limited to narrow or in-house options that don’t necessarily guarantee the best return. 

Asset Manager Vs. Investment Manager: How Do the Roles Differ? 

Though the goal in both cases is to help people make money, the client base and responsibilities of an asset manager and investment manager are quite different.

Asset managers prefer to work with individuals or large businesses with considerable amounts of money to invest. On the other hand, investment managers are generally accepting of individuals and companies of any size and income. 

Investment Manager: Primary Responsibilities

Primary responsibilities include: 

Evaluating risk – Keeping abreast of the changing economic climate to gauge specific risks in client target markets. 

Advising Clients – Reviewing data through thorough statistical analysis and recommending investment opportunities that may be lucrative.

Compiling Investment Reports – Keeping clients informed about how their portfolio of investments is performing.

Profitability Forecasting – Analyzing and subsequently maintaining or adjusting a client’s investment portfolio based on projected profits.

Asset Manager: Primary Responsibilities

Primary responsibilities include: 

Meeting with Clients – To discuss specific financial needs and analyze the risks associated with their assets. 

Chasing Goals – Managing client assets to meet specific short-term and long-term goals.  

Financial Reporting – Creating statements and reports that help clients visualize and evaluate improvements and decide on changes.

Developing Portfolios – Maintaining client portfolios so financial information is clear, organized, and up to date. 

Find the Flexible Funding You Need

Your decision on whether to choose investment management vs. asset management will ultimately depend on whether you are acting as an individual or corporate entity and how much money you have to invest. Either way, the plan you select should actively maximize return based on an acceptable level of risk. 

There are times when it’s prudent to borrow rather than pull money out of your investments. For example, if you get hit by unexpected expenses that damage your cash flow, you may lose more by altering your portfolio than you would by taking a bridging loan from a third party. 

At L3 Funding, we’ve been working with business owners for years to provide flexible, reliable merchant funding solutions. Contact us today to learn more about making the most out of your investments.