Asset Management Business Plan

Using Vanguard again, it's first and foremost an asset management company.

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Asset managers work with client portfolios by considering several variables, including the client's unique circumstances, risks, and preferences.

Portfolio managers select positions customized for the client's income needs, tax circumstances, liquidity expectations, moral and ethical values, and personal psychological profiles.

In many cases, firms charge a minimum annual fee, such as $5,000 or $10,000 per year, to help filter out smaller investors that won't be best served by the firm.

A few asset management companies have minimum annual fees ranging from $100,000 up to $1,000,000.

Hence, they function as both asset managers and "investment advisors," or financial advisors, as FINRA allows them to be called, but are not at all the same type of business model.

In other words, in the same way that all heart surgeons are doctors but not all doctors are heart surgeons, most asset managers are investment advisors but not all investment advisors are asset managers.

The Financial Industry Regulatory Authority (FINRA) allows the following investment professionals to call themselves financial advisors, even though they do very different things and play very different roles for a client: Furthermore, the last category, investment advisors, refers to firms legally known as "Registered Investment Advisors." Many RIAs, as they are known, provide advice to their clients but outsource the actual asset management to a third-party asset management group, either through a negotiated private account or by having the client purchase the asset management company's sponsored mutual funds, ETFs, or index funds.

Additionally, many asset management firms also serve as RIAs.

Many people don't have an in-depth understanding of the asset management business or the investment industry as a whole.

There is also frequently an enormous divide in knowledge, net worth, and experience between well-heeled and average investors, who many times don't even realize all of the potentially-beneficial money management alternatives that are available to them.