The further you dig in to the world of finance and investment, the more complex and potentially confusing the terminology being used becomes.
An alienating experience if you’re not entirely up-to-speed with the jargon being employed, this is often one of the biggest reasons people don’t take as much advantage of financial services as they ought to – because they’re simply not made accessible enough and can therefore feel unwelcome to those who’re new to the field. With the uncertainty surrounding Brexit providing additional confusion within the markets, it’s a testing enough time to be getting involved in the financial sector already.
One common area of confusion and misconception surrounds the difference between asset investment and wealth management. While these two areas do have areas and features that overlap, they do remain completely separate, and there are important distinctions to be aware of – especially if it’s something you are looking in to getting involved with yourself.
This term refers to investments that’re made and secured against physical assets. Alluding to the likes of real estate infrastructure and machinery – amongst much else, including just funds and capital – this is a form of investment strategy that is about buying and selling at the right times to maximise profit.
Asset management firms are a business in their own right, too. Tasked with creating an investment portfolio on behalf of their clients, which tend to be larger corporations and companies than individuals or small business.
While there are elements of asset investment within wealth management, this tends to be a far wider reaching and all-encompassing relationship than purely investment related.
Wealth management firms will aim to look after the entire financial health of either an individual or company client, giving accountancy services, filing taxes, planning for retirement, managing pensions and long-term estate planning – all of which is done on top of any financial or investment advice that’s provided. One individual wealth manager is likely to look after each specific client to provide a far more bespoke and tailored service, so this can sometimes become a relationship where banking advice is given and direction provided where any charitable activity is concerned, too.
There are some companies that will benefit from services such as this, but it tends to be more high net worth individuals that require a the more hands-on approach of a wealth management firm, as taking care of their own funds may simply be too large of a task.