What is the difference between wealth management and asset management?

As we advance in life, our finances can become more complex to manage. While starting up a personal pension or saving for a home are typically the first financial issues people come across, from their thirties onwards, a more complicated collection of concerns may be added.

This can include accumulated assets, protective policies, planning for retirement and ensuring that when a person dies, the people they leave behind are financially secure. For this reason, many people select to enlist professional financial services to assist them. In the following sections, we’ll look at two of these options and answer the question “what is the difference between wealth management and asset management?”

How do you define “asset management” and “wealth management”?

As the name suggests, “asset management” refers to the direct management of a person’s assets and may involve investments such as fixed income securities, equity or property, among others. Asset management services are predominantly focused on maximising the returns for their client’s assets.

The term “wealth management”, on the other hand, refers to oversight of all financial aspects of their client’s financial situation, and this can include management of taxes, estates, assets and cash flows, along with other uses for money. A wealth management service includes asset management but takes a more holistic view of a client’s personal finances. Depending on their individual needs, an investor must choose whether they require the assistance of an asset management service or one that offers wealth management.

What are the main differences between asset management and wealth management?

The role of asset managers is to efficiently manage a person’s investments, such as fixed income securities, property, stocks and other assorted assets, while dedicated wealth managers will manage the entirety of person’s financial affairs. This includes, but is not limited to, asset management, tax, legacy, education, cashflow, charitable contributions and insurance, as well as estate and retirement planning.

The main goal of asset managers is to maximise the returns from a client’s portfolio of investments, while the key aim of wealth managers is to balance all potential uses of client’s overall monies in order to maximise and preserve wealth for the long-term by employing both investment and financial strategies, tax and accounting approaches, as well as estate and legal planning.

As specialists in their field, asset managers will tend to provide in-house products, and for the most part, they will use a narrower and more focused approach as they are primarily investment experts and operate closer to the current market. On the other hand, wealth managers are driven by process and seek out synergy gains using the coordinated expertise from the input of financial advisories, such as the client’s personal attorney, insurance provider and accountant, among others.

Asset management services are typically provided by firms that are officially registered and listed as broker-dealers. This means that they are only obligated to offer clients investment products that are deemed suitable. Wealth managers, however, are registered as professional investment advisors, which means that they have a fiduciary or legal responsibility to put the financial interests of their clients before their own in all activity.

Traditionally, asset management compensation has always been commission-based, but modern firms are showing an increasing shift towards a more fee-based business model for their clients’ assets being managed. Wealth management firms have traditionally been compensated using a retainer and fee-based model, along with an established fee for all assets under their management.

Professional asset managers will advise on the allocation of assets and potential opportunities for new investments, offer analysis for risk versus return and formulate portfolio strategies, among other areas. Effectively, the sole concern of asset management is determining the best method for investing and managing a person’s money, leaving all other financial aspects, such as tax planning, estate planning, cash flow planning and retirement planning, among others, for the client to work out for themselves.

The key aim of wealth managers is always to grow the accumulated wealth of their clients, as well as delivering expert advice on financial planning for the future. This is why the services offered by wealth management companies can be particularly appropriate for people who are approaching their retirement, as they can help them prepare for all aspects of their financial requirements in later life.

Do you require an asset manager or a wealth manager?

While asset management and wealth management are often thought interchangeable by many, there are significant differences between these services. While both options manage and grow the financial resources of those they serve, some clients may require an expert eye over more than just their investments.

Asset management services are suited to investors who need managing their assets. To assist, asset managers will identify assets suitable for a client and provide professional advice using analysis formed of present and past trends, risk versus return, investment strategy and appropriate projections.

Wealth managers offer a more comprehensive service for financial management that is suited to clients who require assistance in all of their financial affairs. While including asset management, this will also encompass financial planning, retirement planning, tax planning and estate planning. A client who needs an all-inclusive solution may find that an ongoing relationship with their own personal wealth manager to be a more appropriate option than enlisting the aid of a firm that only offers asset management.

If, when looking at your personal finances, you realise you require help only with your investments, an asset manager is ideal, but if you need guidance for long-term financial planning, a wealth manager is a better choice.

Specialist wealth management services

If you’re currently asking “what is the difference between wealth management and asset management?”, and you need guidance on the best service for your financial circumstances, at Hartey Wealth Management, we can help. Those seeking experts in wealth management in Chester will benefit from our specialist team with over 25 years’ experience advising clients on practical and effective ways to manage their money. If you’re looking for an independent eye on your assets and in need of a comprehensive service that considers all aspects of your financial affairs, get in touch with our team today.


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