When it comes to the general concept of personal finance, it is crucial for each person to have a good foundation of financial literacy. Understanding the basics such as budgeting, investing, and savings goes a long way.  

However, if you’re a person with a high net worth, you might be wondering about wealth management and asset management.  

Which one is best for you and your financial goals? How can these help with your financial situation? What is the difference between the two? 

Before you hire a professional financial planner, here are several things you should know about wealth management and asset management: 

What is Wealth Management? 

Wealth management is based on the concept that people with high net worth need a more extensive variety of services compared to those provided by regular financial advisors. High-net-worth individuals benefit from an all-encompassing, customizable, and personalized approach from a professional financial manager.  

According to studies, customers greatly outperform when hiring a wealth manager. Studies have shown that customers with a reliable wealth manager get an increase of 3% on average in the value of their portfolios every year.  

Though still considered a subset of financial advisors, wealth managers provide a huge variety of services to their clients with high net worth.  

Services from wealth management firms are greatly more comprehensive and hands-on.  

What is Asset Management? 

To make things simple, asset management is a huge business. For those who don’t know, assets refer to resources with value in the economy. This is particularly true for items that you can convert to cash. This includes investments, cars, real estate, and much more.  

Thus, asset management is a service offered by a financial management company. As the name implies, this service is about managing your assets. Asset managers organize the portfolio of their customers to best meet their goals and needs. They need to focus on the risk tolerance, preferences, and unique situation of the client.  

Though assets do generally refer to the complete financial holdings of an individual, asset managers are mainly focused on investments. This includes ETFs, mutual funds, bonds, and stocks.  

To summarize everything, asset management is about making the best possible investment for customers. It has a main focus on growth. Regular services provided by asset managers include: 

  • Asset distribution 
  • Strategies for lowering tax 
  • Re-balancing of investments 
  • Portfolio design 
  • Risk evaluation 
  • Data analysis 

Always remember that managers or companies do usually set investment minimums for asset management as a service.  

What is the Primary Difference Between Wealth Management and Asset Management? 

In general, you will need the help of a financial advisor if you want help to achieve your financial goals. Both wealth and asset management fall under this category as types of financial advisors.  

When it comes to wealth management and asset management, wealth management provides a more holistic look at the overall financial situation of a client. They focus on long-term wealth protection.  

For most investors, asset management is only an option. On the other hand, wealth management is particularly for people with high net worth.