Wealth management is also called the investment of the rich. The fact is that investing with asset managers is only profitable above a certain amount and is not a sensible option for small investors. How exactly do asset managers work and when does it make sense to let someone else manage your money?
The topic of asset management is very multifaceted and is only worthwhile for certain people. Especially for institutional investors, such as insurance companies, the investment is worthwhile. With us you will learn all the important facts about asset management, the different investors and the best tips to find the right asset management.
The most important at a glance:
Asset managers monitor and manage clients’ assets while acting as investors
In principle, a distinction is made between asset management for institutional and private investors
Institutional investors are, for example, foundations, insurance companies or wealthy private investors whose assets are managed individually. Private investors have the choice between standardised and individual asset management
Choosing the right asset management is very important to invest the money profitably.
The facts – asset management for investors
Asset management companies do nothing more than make investment decisions for their clients. As a client, a power of attorney is issued which allows the asset managers to manage, look after and invest their own assets wisely. Clients can, of course, set specific parameters for their wealth manager and thus make the most important decisions themselves. Wealth managers, or asset managers, manage and monitor the assets of others while acting as investors. In principle, a distinction can be made in wealth management between asset management for institutional and private investors.
Asset managers monitor and manage clients’ assets while acting as investors
In principle, a distinction is made between asset management for institutional and private investors
Institutional and private investors
The fundamental differences in asset management – For institutional investors, such as foundations or insurance companies, an asset manager makes sense who optimizes and manages the institutional assets along investment strategies. For wealthy private investors, on the other hand, it makes sense to have a portfolio manager who looks after and monitors the assets, simply because looking after them themselves would be too time-consuming.
Private investors can choose between standardised and individual asset management. Standardised asset management is run by a manager who groups together a larger group of clients with similar investment objectives and works on them as one portfolio. Individual wealth management, on the other hand, is tailored to a client. An investment plan is tailored to the individual’s assets with an eye toward risk and return. The portfolio manager then invests in stocks, bonds, index funds or commodities to profitably invest the client’s assets.
Important for all clients of asset management is the liability. In the event of the asset manager’s insolvency, they are not liable for their own assets. During the entire asset management process, these assets continue to be held in accounts that are in the client’s name and to which the portfolio manager only has access with the help of a power of attorney.
Institutional investors are, for example, foundations, insurance companies or wealthy private investors whose assets are managed individually.
Private investors have the choice between standardised and individual asset management
What you need to pay attention to – 4 steps
Finding the right asset management company is not always easy. However, it is very important to have confidence in your own asset management company, as it will be looking after and investing your assets. To help you make the right choice, we have put together four steps to help you find the perfect asset management company:
When is asset management worthwhile?
Depending on the type of management, asset management is only worthwhile above a certain level of assets. For standardised asset management, the minimum amount is around 50,000 euros, depending on the bank. Individual asset management, however, only pays off for you from a higher level of assets. In this area, there are minimum investment amounts of 500,000 euros and more. Asset management is therefore not worthwhile for small investors, as the costs are disproportionately high to the assets invested. Whether asset management is worthwhile in an individual case should be decided after consulting with various banks.
Genuine and non-genuine asset management
Since the term asset manager is not legally protected, you should only rely on the designation financial portfolio management to be approved by BaFin. (§ 1 para 1a no. 3 KWG) These asset managers are also referred to as real asset managers, as they take over the tasks from them. The non-genuine asset managers, on the other hand, are often only an advisory service that can give you tips on how to build up your assets, but do not take over this task for you.
Characteristics of good asset management
However, the term financial portfolio management is not sufficient to identify a good asset management company. The terms Certified Financial Planner (CFP), Chartered Financial Analyst (CFA) or Certified International Investment Analyst (CIIA), on the other hand, provide a better indication that the portfolio manager is qualified in his or her work. Another important characteristic is the personal impression the portfolio manager makes on you. If he asks many and intensive questions about your personal life and financial situation and keeps a professional distance, these are all good signs. A similar understanding of risk is also important in order to be able to build trust.
The costs of asset management
The rule of thumb for the costs of asset management is that the fees should not exceed 1.5% per year in relation to the investment amount. For the work of an asset management company, you pay fees, profit sharing or flat fees in addition to the basic fees, depending on the agreement.
Checklist Asset Management
The most important points for the right asset management at a glance:
Is your investment amount for asset management high enough to make the investment worthwhile?
When selecting asset management, the trademarked term financial portfolio management should come up.
Check the professional qualifications and experience of your portfolio manager and listen to your gut.
The fees should not exceed 1.5% per annum in relation to the amount invested.
The largest asset management
Most of the largest providers of wealth management services are based in the USA, but Switzerland is also traditionally represented, particularly in the private sector. We have summarised the largest asset management companies in the various sectors for you.
Top 5 largest institutional
Institutional asset management firms were led by the U.S. in 2017. The top 5 largest institutional asset managers:
1st place: BlackRock with assets of USD 6,288 billion from the USA
2nd place: Vanguard Group with assets of USD 4,940 billion from the USA
3rd place: State Street Global with assets of USD 2,782 billion from the USA
4th place: Fidelity Investments with assets of USD 2,449 billion from the USA
5th place: Allianz Group with assets of USD 2,358 billion from Germany
Top 5 largest private companies
Private wealth management firms were led by Switzerland in 2018. The top 5 largest private wealth management firms:
1st place: UBS with USD 2,404 billion in assets from Switzerland
2nd place: Morgan Stanley with assets of USD 1,972 billion from the USA
3rd place: Bank of America with assets of USD 1,950 billion from the USA
4th place: Wells Fargo with assets of USD 922 billion from the USA
5th place: RBC with assets of USD 791 billion from Canada
