Wealth management vs asset management – two different concepts when it comes to managing client’s money.

It is important to understand the key differences between the two so that you can make the best decision for your financial circumstances and future.

Ultimately, a good financial advisor should be able to help you with both asset and wealth management services.

In this article I cover:

  1. What is Wealth Management
  2. What should you expect from a Wealth Management Service
  3. What is Asset Management
  4. What should you expect from an Asset Management Service

What is Wealth Management?

Wealth management looks at the big picture, providing expert advice on your overall financial situation to preserve your wealth and grow your net worth over the long term.

Wealth management can include providing advice on a broad range of services including:

  • investment planning

  • retirement planning

  • tax planning

  • wealth preservation

  • estate planning and more…

Wealth management often employs a wide range of strategies, such as diversification and hedging, in order to minimise risk and maximise returns, whilst also protecting client’s overall financial health.

Diversification

Investment diversification is an investment strategy that spreads risk by investing in a variety of asset classes. The goal of diversification is to minimize the impact of any one particular investment on the portfolio. For example, if the stock market declines, bonds may hold their value or even increase in value.

By investing in both stocks and bonds, the investor’s overall portfolio can weather the storm better than if all of the eggs were in one basket. While no investment is without risk, diversification can help to reduce it. Over time, this can lead to greater stability and peace of mind for the investor. And that is worth its weight in gold.

Finanical Hedging

Financial hedging is a risk management technique used by businesses and investors to protect themselves against potential losses. It involves taking out insurance or investing in financial instruments that will offset any potential losses from an adverse event.

Hedging can be used to protect against interest rate changes, commodity price fluctuations, and other types of market risks. While hedging can help to reduce the impact of adverse events, it is important to remember that it does not guarantee a profit. Careful planning and analysis is required to ensure that hedges are effective and do not create new risks.

There is no one-size-fits-all approach. When it comes to future planning, what works for one person may not be the best course of action for another.

What should you expect from a Wealth Management Service?

First of all, your wealth manager should have a deep understanding of both financial planning and managing investments.

One of the most important aspects of financial planning is setting short and long term objectives and goals. Without a clear sense of what you want to achieve, it can be difficult to make sound decisions about your money whether you’re focusing on retirement planning, or saving towards a specific purchase etc.

Your goals may change over time, so having a clear understanding of your current financial situation is always essential.

Wealth managers should be able to help you create a comprehensive plan that meets your unique needs, objectives, goals and financial circumstances. This plan can include strategies for investing, saving, and spending.

A wealth manager can also:

  • provide guidance on how to best use income, assets, and debt in order to achieve financial goals
  • help you create a budget and stick to it
  • help you make informed investment decisions
  • provide access to exclusive investment opportunities and products
  • help you grow your wealth at a faster rate than you would be able to on your own
  • help you maintain a diversified portfolio of assets, including assets that will hold their value over time, to reduce risk
  • be there to help you through difficult global economic trends, and market conditions, working with you to keep your portfolio on track

They should always be transparent with you, keeping you informed about all aspects of your financial situation.

If you are looking for a financial advisor to help you with wealth management, it is important to find one that can offer you all of these things.

Having the right Investment Strategies can make a significant difference to your returns.

Download this free guide to help you understand what asset allocation is and the impact this strategy can have on the growth of your investments.

Asset Allocation Guide
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What is Asset Management?

According to Investopedia.com:

“Asset management” is the practice of increasing total wealth over time by acquiring, maintaining, and trading investments that have the potential to grow in value. Asset management professionals perform this service for others. They may also be called portfolio managers or financial advisors.

It is common among institutional investors, such as pension funds and mutual funds, however, there is a growing trend of wealthy individuals using asset management firms and strategies to manage their portfolios.

The goal of asset management is to maximise returns from client’s investments. It is typically more focused than wealth management and may use a narrower range of strategies.

What should you expect from an Asset Management Service?

For many people, the idea of investing in assets can be daunting. There are so many different options available, and it can be difficult to know where to start. However, working with an asset manager can help to make the process much easier.

Asset managers are financial experts who can provide advice on which assets are currently performing well and are likely to continue to do so in the future.

They also offer a range of services, including portfolio management and asset allocation. As a result, working with asset investment experts can help to maximise your chances of success. In addition, these services can also help to reduce the amount of time you need to spend researching investment opportunities.

In Summary – Which Is Right For You?

Ultimately, a wealth manager can be a valuable resource for anyone who is looking to build their financial future, with support and investment advice across multiple financial aspects including tax planning, legacy planning, retirement planning, estate planning and more.

Whereas if you’re looking specifically at investable assets but don’t know where to start, or would like to tap into a wealth of experience, then working with an asset manager offering asset / investment management services could be the perfect solution for you.

If you would like to discuss how TT Wealth could help you with either wealth management or asset management services, get started by booking a free 30 minute call:

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