What Is Investment Management?
Investment management services include
Investment management refers to
the handling of financial assets and other
investments—not only buying and selling
them. Management includes devising a
short- or long-term strategy for acquiring
and disposing of portfolio holdings. It can
also include banking, budgeting, and tax
services and duties, as well.
The term most often refers to managing the
holdings within an investment portfolio, and
the trading of them to achieve a specific
investment objective. Investment
management is also known as money
management, portfolio management, or
wealth management.
KEY TAKEAWAYS
 Investment management refers to
the handling of financial assets and
other investments by professionals
for clients
 Clients of investment managers can
be either individual or institutional
investors.
 Investment management includes
devising strategies and executing
trades within a financial portfolio.
 Investment management firms
handling over $25 million in assets
must register with the SEC and
accept fiduciary responsibility
toward clients.
Understanding Investment Management
Professional investment management aims
to meet particular investment goals for the
benefit of clients whose money they have
the responsibility of overseeing. These
clients may be individual investors
or institutional investors such as pension
funds, retirement plans, governments,
educational institutions, and insurance
companies.
asset allocation, financial statement
analysis, stock selection, monitoring of
existing investments, and portfolio strategy
and implementation. Investment
management may also include financial
planning and advising services, not only
overseeing a client's portfolio but
coordinating it with other assets and life
goals.
Professional managers deal with a variety
of different securities and financial assets,
including bonds, equities, commodities, and
real estate. The manager may also manage
real assets such as precious metals,
commodities, and artwork. Managers can
help align investment to match retirement
and estate planning as well as asset
distribution.
Advantages and Disadvantages of
Investment Management
Though the investment management
industry may provide lucrative returns, there
are also key problems that come with
running such a firm. The revenues of
investment management firms are directly
linked to the market's behavior.
This direct connection means that the
company's profits depend on market
valuations. A major decline in asset prices
can cause a decline in the firm's revenue,
especially if the price reduction is great
compared to the ongoing and steady
company costs of operation. Also, clients
may be impatient during hard times and
bear markets, and even above-average
fund performance may not be able to
sustain a client's portfolio.
Pros
 Professional analysis
 Full-time diligence
 Ability to time or outperform market
 Ability to protect portfolio in down
times

Cons
 Sizeable fees
 Profits fluctuate with market
 Challenges from passively managed
vehicles, robo-advisors
Investment Management Process
Investment managers typically design a
portfolio with the client's interests in mind.
This can include meeting with the clients to
discuss their investment goals and risk
tolerance. Based on the client's feedback,
the investment manager then buys the
assets and securities to fill the client's
portfolio.
From then on, the manager will
occasionally rebalance the portfolio as the
market changes. The frequency depends
on their agreement with the client—in some
cases, it may be assessed once a year,
once a quarter, or even every month. The
more actively a portfolio is being managed,
the higher the management fees.
Investment managers may also provide
advice to their clients in other areas, such
as how to save for college or retirement.
What Does Investment Management
Entail?
Investment management, also known as
asset management or portfolio
management, is the professional
management of various securities (such as
stocks and bonds) and assets (such as real
estate) to meet specified investment goals
for the benefit of investors. Investment
management services can be provided by
individual portfolio managers, investment
management firms, or financial institutions.
Investment managers conduct in-depth
research and analysis of various financial
instruments and market trends to make
informed investment decisions. They
develop and implement investment
strategies, allocate assets, manage risk,
and monitor the performance of their
clients' portfolios. They also maintain
ongoing communication with their clients to
ensure that the investment objectives
remain aligned with the clients' financial
goals and risk tolerance.
How Do Investment Management Firms
Make Money?
Investment managers charge a fee for their
services. The exact fee structure depends
on the manager and the client's needs:
most will charge a small percentage of the
client's assets, a share of the annual gains,
or an annual fee. Some managers may
accept a flat fee for a one-time consult.
The Bottom Line
Investment management, also known as
asset management or portfolio
management, is a service that helps
investors achieve their financial goals and
objectives through the professional
management of their securities and assets.
By employing various investment
strategies, conducting thorough research,
and consistently monitoring market trends
and portfolio performance, investment
managers enable clients to optimize their
investments and navigate the complexities
of the financial markets. As fees and
investment approaches vary, it is essential
for investors to carefully evaluate their
options and choose an investment manager
whose expertise, strategies, and fee
structures align with their unique financial
goals and risk tolerance. Ultimately, a well-
managed investment portfolio can
significantly enhance an investor's long-
term financial security and wealth.