What is Asset Management?

True Tamplin

Written by True Tamplin, BSc, CEPF®
Updated on January 11, 2021

Asset Management Definition

Asset management is the service of managing a client’s assets on their behalf.

Asset managers invest the client’s assets in financial instruments with the goal of appreciating the client’s assets while mitigating risk.

Asset management services may be performed by an institution, such as an investment bank, or by individuals, such as wealth managers.

There are typically investment minimums required by asset managers, meaning that this service is most often used by high net worth individuals, government entities, corporations, and financial intermediaries.

The Purpose of Asset Management

The purpose of asset management is to make investments on a client’s behalf that will grow their portfolio and maximize their return on investment.

This is especially useful for individuals or entities with significant assets who may lack the time or expertise to optimally manage and invest on their own.

Examples of Asset Management

The most common investments for asset managers to make are in equity, fixed income, real estate, commodities, EFTs, and mutual funds.

Asset managers often work closely with their clients, and so they can tailor their investments to match the client’s personal wishes, their values, and even their personality.

Some institutions, such as Merrill Lynch, a subsidiary of Bank of America, offer investment and banking services under the same roof.

They are able to offer these types of accounts due to the passing of the 1999 Gramm-Leach-Bliley Act, which replaced the Glass-Steagall Act of 1933 that prohibited banks from offering investment and banking services together.

What is Asset Management FAQs

Asset management is the service of managing a client’s assets on their behalf.
The purpose of asset management is to make investments on a client’s behalf that will grow their portfolio and maximize their return on investment.
The most common investments for asset managers to make are in equity, fixed income, real estate, commodities, EFTs, and mutual funds.
Asset management is especially useful for individuals or entities with significant assets who may lack the time or expertise to optimally manage and invest on their own.