Have you read Schwab’s “RIA Industry M&A: Behind the Numbers” report? Our own Sammy Grant, principal, and Andy Berg, CEO, share insight into what works in attracting and retaining top talent in a post-Covid world.

Digging into your finances can be overwhelming, and as you start to consider who to work with as your financial advisor it can quickly get confusing.  Some firms talk about wealth management, while others talk about investment management or asset management.  Which kind of manager do you need, and what kind of management will you receive based on your selection?  Let’s dive into the differences to help you understand the different kinds of financial management available.

Asset Management

If you are a DIY investor and you already have a financial game plan as well as an overall investment allocation plan, you may only be interested in finding an asset manager.  Let’s say you have built out your wealth forecast and you know what level of risk and return you are targeting — and you have determined what asset allocation mix of stocks, bonds, and alternatives will get you to that target.  At that point you may be looking for a specific manager to implement part of your strategy.  If you know you want to be 20% in municipal bonds you may then seek out a municipal bond asset manager who manages a portfolio of bonds for you.  Asset management typically involves managing a specific strategy inside a specific asset class, although it could involve multiple asset classes.  Asset managers are typically just executing on a strategy that they have already developed, and they depend on you to determine if you want to use the strategy and then use them as the manager.  Typically asset managers are not working with you on your overall asset allocation — think of them more as product managers who are lined up in the asset store waiting to be chosen once you have decided what you want in your portfolio pie chart.  Selecting an asset manager can be tricky, given that past performance is not the only metric you will want to use when choosing a manager.  For this reason, many people choose to at least move one step up to Investment Management.

Investment Management

If you think you have your financial life plan pretty well laid out and you know what kind of risk and return you want to target, you may be a candidate for Investment Management services.  Banks, brokers and registered investment advisers all can offer investment management services.  It is quite common for banks and brokers to lean more toward investment management than wealth management, although that has changed over time.  Investment management is narrowly focused on building your portfolio game plan and executing that plan using various strategies and asset managers.  The advisor may work with you to assess your risk comfort upfront, and hopefully will ask you questions about your goals and desired returns even though they will not typically dig into that analysis with you because they assume you already have it figured out.  Their primary job is to invest your money in various places and report back to you on how it is doing.  If you want financial help beyond just someone investing your money in some assets, then Wealth Management probably makes more sense for you.

Wealth Management

Here at Homrich Berg, our primary focus is on full service comprehensive Wealth Management.  We believe this is defined by providing advice on all aspects of your financial life.  This includes investment management but also includes financial planning topics.  We do have a few clients where we really only provide Investment Management services (primarily nonprofit foundations and institutions), but our core service offering is true Wealth Management.  We believe in the importance of marrying good financial planning with good investment management, and starting with a financial game plan to ensure that the investment management plan truly aligns with the goals of the family.  The first step in financial planning is building your family wealth forecast to map out your likely positive and negative cash flows from income and asset sales and life events ahead.  Financial planning can also include estate planning, charitable planning, retirement planning, tax planning, insurance planning, education planning, and multi-generational planning. The beauty of comprehensive wealth management is that no questions are out of scope, and the services are always available to you when you need them as your life changes.  No plan is set in stone because life is always surprising us with new opportunities and challenges.  Your Homrich Berg financial advisor is always there to help you dig into any of these topics as they suddenly become important based on changes in your life or changes in the world around us including tax laws.

Hopefully this short summary helps you understand the world of financial management and the differences between asset management, investment management, and wealth management.  Feel free to contact us to learn more about how our services might be a fit with your specific needs at any time using the contact us form on our website or call 404.264.1400.

This information reflects Homrich Berg’s views, opinions and analyses as of 09/23/21 unless otherwise indicated, with no obligation to update. The information is provided for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any investment product. The information does not represent legal, tax, accounting or investment advice; recipients should consult their respective advisors regarding such matters.