Whether you have a savings account that you would like to earn more, or you are the CFO of a company with huge assets to invest, according to Wes Edens on Wikipedia, your best option is to find an investment manager. Investment management generally refers to buying and selling investments within a portfolio. It may also include budgeting, banking and taxes, but the main objective is the trading of securities to achieve a financial objective.
An individual can be his or her own investment manager, or they can employ an investment management company. There are several management styles such as active, passive, conservative or aggressive. Conservative managers usually look for low-risk investments that may not bring high profits but are safe. Aggressive managers may look for high-risk investments that, if successful, bring more profit.
What Investments are Selected?Â
Most people who invest through their 401k accounts are usually invested in mutual funds. These are a pool of funds that are collected from many people to be invested by a manager. Mutual funds contain several different types of assets such as stocks, bonds and money markets. Mutual funds have a prospectus that states the investment objectives. Investors who like those objectives invest in the mutual fund. The manager works to produce income and capital gains for the group of investors. Mutual funds have the advantage of allowing small investors access to a more diversified portfolio that is professionally managed.
What Do Investment Managers Do?
Investment management services include asset selection, elements of financial statement analysis, stock selection, ongoing monitoring of investments and plan implementation. There are national and regional investment brokerage firms. National firms are called wire houses that have networks of hundreds of offices all over the world and offer many financial services to clients beyond investment management. Regional firms have many different offices that are usually within a specific region of the country. They also offer fewer financial products and services and manage lower amounts of capital than national firms.
What are Exchange Traded Funds?
Exchange Traded Funds (ETF) own the group of assets such as gold bars, stocks, bonds or oil futures and divides the ownership of those assets into shares. Shareholders do not have any claim on the assets, but they indirectly own them. The get a portion of the profits in the form of earned interest or dividends, and if the fund is liquidated, they may get residual value. One advantage is that ETFs have higher liquidity and lower fees than mutual funds, which makes them an attractive alternative for small investors.
The Benefits of Having an Investment Manager
Peace of mind is one of the main benefits of knowing that a knowledgeable, professional person is looking after your investments. Other benefits include less volatility and higher returns. You can expect income and growth from your investment as well as unbiased and objective investment advice. There is no guarantee that an investment manager can increase your profits, but there are several things they can do such as give your investments full-time attention and use investment strategies that are not available to the common investor.
Investment managers are accountable for your money. They have a great responsibility to make sure it is safe and that it grows in value. They use market timing, a wide selection of shares and external research as the basis for their philosophy of investing.
This is a Guest Post.
An important topic for those considering hiring outside help.
I always suggest people seek out 'Fee-only' advisors should they decide on not managing their own accounts. These types of financial planners are registered investment advisors with a *fiduciary responsibility to act in their client's best interest. They do not accept any fees or compensation based on product sales. Fee-only advisors tend to have fewer inherent conflicts of interest and they generally provide more comprehensive advice.
* A good breakdown of a fiduciary can be found on the Consumer Finance Protection Bureau site >>> http://www.consumerfinance.gov/askcfpb/1769/what-…
Contrast 'Fee-only' with 'Fee based' advisors who typically receive fees paid by the client as well as commissions paid to them by a brokerage firm, mutual fund company or insurance company.
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Hey good points jcmolet. Thanks for stopping by.
Great post.