Asset management controls more than £5.7 trillion in the UK and is responsible for more than $111 trillion in investments worldwide. It is an important business process in Financial Services. It helps individuals and institutions manage their assets in accordance with investment objectives, risk appetite and short and long term financial goals.
As a function, asset management ensures that assets are acquired, developed, operated, maintained and sold in the most cost-effective way possible and to yield optimum returns
What is an Asset Manager?
The role of an asset manager is vital in achieving these objectives, by developing, activating and maintaining the investment portfolio. Asset Managers typically manage client assets in line with pre-established preferences, and help make important decisions on the client’s behalf, driving portfolio growth and success.
This collaborative process involves strong relationship management capabilities and relies on a solid market reputation too. Regular client meetings assess each different investor’s requirements, reviews their risk appetite, understands their current asset status and report on goals and progress throughout the investment period.
The success of this relationship can maximise the investor’s wealth and growth ambitions, remove the complexity from asset management and provide clear asset strategies on all types of short- and long-term financial planning.
As well as managing institutional or individual client relationships, the asset manager also manages third party relationships with other stakeholders, such as property managers, brokers and intermediaries, as well as middle office and back office functions like legal and compliance teams. To that end, a good asset manager should have strong communication, persuasion and negotiation skills and be highly organised with good time and project management capabilities.
Analysing and Reporting in Asset Management
Asset Managers provide full transparency to investors, by preparing detailed financial statements, reporting on business activity, and forecasting expected results and any deviance from projections. They will also manage and monitor exposure to risk and ensure that risks are mitigated wherever possible
Asset managers have their fingers on the pulse of geo-political, economical and financial market forces and understand where the asset mix could be at risk of depreciation or exposure. They work closely with analysts and data to predict, project and protect the portfolio and identify new investment opportunities. The asset manager is constantly seeking new ways to reduce portfolio administration and other costs, mining financial reports and analysing portfolio data.
The importance of Good Asset Management
It’s vital for investors to understand and track their assets mix and for stakeholders to have insight into the structure of portfolios. Which assets are liquid, which are fixed, where does opportunity to diversify lie, where are the assets located…and so on? These insights steer optimum return and ensure that there is cash on hand, if or when required. Asset management can both identify and manage risk and or compliance of any asset classes, not just in relation to financial risk but also reputational. Furthermore, asset management controls make sure that financial statements are always up to date and ready for use when required.