what is asset management 
asset management is the practice of buying selling and managing investments commensurate with specific risk tolerances to increase wealth over time asset management professionals perform this service for clients they may also be called portfolio managers or financial advisors many work independently while others work for an asset management company investment bank or other type of financial institution investopedia sydney saporitounderstanding asset managementasset management has a double barreled goal increasing value while mitigating risk tolerance for risk is one of the first topics that an asset manager might raise with a client a retiree living on the income from a portfolio or a pension fund administrator overseeing retirement funds is or should be risk averse on the other hand a young person or an aggressive investor of any age might want to dabble in high risk investments most people fall in between these two extremes and asset managers try to identify where a client s risk tolerance lies thus an asset manager s role is to determine what investments to make or avoid and to realize the client s financial goals within the client s risk tolerance limits the investments they select may include stocks bonds real estate commodities alternative investments and mutual funds among the better known choices asset management can involve rigorous research using both macro and micro analytical tools this research includes statistical analysis of prevailing market trends reviews of corporate financial documents and anything else that would aid in achieving the client s stated goal of asset appreciation types of asset managersthere are several different types of asset managers distinguished by the kinds of assets they specialize in and the level of service they provide each type of asset manager has a different level of responsibility to the client so it is important to understand a manager s obligations to their clients before deciding to invest a registered investment adviser ria is a firm that advises clients on security trades and manages their portfolios rias are closely regulated and are required to register with the sec if they manage more than 100 million in assets a broker is an individual or firm that acts as an intermediary for their clients buying stocks and other securities and serving as custodian of customer assets brokers generally do not have a fiduciary duty to their clients so it is always important to research them thoroughly before becoming a client and buying anything a financial advisor is a professional who can recommend investments to their clients and buy and sell securities on their behalf financial advisors may or may not be fiduciaries some financial advisors specialize in a specific area such as tax or estate planning the most affordable type of investment manager isn t a person at all a robo advisor is a computer algorithm that automatically builds monitors and rebalances an investor s portfolio to suit their needs they sell and buy investments aligned with programmed goals and risk tolerances because there is no person involved services provided by robo advisors cost much less than personalized asset management handled by human beings the robo advisor market is expected to grow from 9 5 billion in 2024 to 72 billion in 2032 1cost of asset managementasset managers have a variety of fee structures the most common model charges a percentage of the assets under management with the industry average at about 1 for up to 1 million larger portfolios are usually charged fewer and lower fees due to their size other asset managers may charge a fee for each trade they execute some may even receive a commission to upsell securities to their clients because such incentives and transactions might not be in a client s best interest it is important to know if your asset management firm is a fiduciary if it is not it may recommend investments or trades that are inappropriate for a client s investment experience and financial goals 