Asset Management vs. Wealth Management in LA and San Diego

Asset Management vs. Wealth Management in LA and San Diego
November 13 14:09 2018 Print This Article

To the uninitiated, wealth management and asset management are very much one and the same thing. This confusion often comes about due to the fact that most people view both things (wealth and assets) as the same tools for financial gain. What makes it even worse is the fact that some professionals in the fields often use the terms interchangeably when trying to explain their position to their customers.

While it is true that both asset management and wealth management are terms used when describing the management of financial resources as well as the process of growing investments, some subtle differences must be noted. The main aim of both processes is to increase investment income, grow wealth, and nurture profitability from various investment opportunities in LA and San Diego.

Granted, both wealth management and asset management will make you money if you hire the right advisers, the trick is in identifying the kind of advisor you need based on the kind of financial goals you want to achieve. That is why it is important to understand the subtle differences between wealth and asset management; so you can hire the right kind of advisor.

What is Asset Management?

These are the services typically offered by banks as well as other financial institutions in managing the assets that belong to their investors. In this case, the term “assets” refers to a wide variety of things that may include:

  • Bonds
  • Stocks
  • Real estate

What you need to understand is that asset management is rather expensive and as such is often a preserve for high net worth individuals. However, in many cases, asset management is carried out by governments, corporations, and any other forms of entities that have a large asset portfolio.

The intricacies of asset management involve:

  • Ascertaining the value of assets
  • Measuring the financial health of assets
  • Measuring the growth potential of assets
  • Sourcing out various investment opportunities for those assets

Your asset manager’s job is to analyze the past and current data to come up with a viable risk analysis, create a projection for growth, and come up with a strategy to maximize the potential for profit while leveraging the assets under his/her management.

What is Wealth Management?

Technically speaking, wealth management can be defined as any professional service that involves the management of financial assets to generate or manage wealth and income. As you can see, the definition is very similar to that associated with asset management. The difference is that wealth management is broader and encompasses asset management as well. Wealth management is a concept that covers:

  • Asset management
  • Portfolio and investment management
  • Tax planning
  • Real estate planning
  • Financial planning
  • Investment advisory services

A professional wealth management outfit goes above and beyond just making you money. Alongside investment advice, they also offer tax and accounting services as well as estate planning services at an additional fee.

Wealth management services in LA and San Diego are important to more than just high net-worth individuals. They can be offered to corporations and even small businesses that need help with their financial management. Since the term is so broad, what constitutes wealth management varies from party to party.

Say for example a small “Mom and Pop” shop business owner may need help with bookkeeping and taxation. In this kind of scenario, they will hire a wealth management outfit for tax planning, checkbook balancing, and even liquidity management.

A huge corporation, on the other hand, may need a wealth management outfit to help with investment advice, tax planning as well and estate planning.

Wealth Management Versus Asset Management

The most obvious difference between these two is the range of services offered:

The Range of Services Offered

Even though both have asset management at the core of their La and San Diego business, wealth management offers a far more extensive range of services that will include things like:

  • Asset allocation
  • Tax planning
  • Asset structuring
  • Philanthropy
  • Estate planning
  • Real estate
  • Family arbitrage
  • Art

Plus, a whole host of other services such as the relocation of families or companies that may come at an additional fee.

The Different Types of Packages Available

Asset management is sort of rigid when it comes to the different types of packages offered to clients. In many cases, you will find that an asset management firm or bank already has a set selection of packages offered to their high net-worth individuals that include a specific set of parameters.

Wealth management, on the other hand, can be tailor-made to fit the client’s needs. In many cases, anybody looking for wealth management services will first have a sit-down with their specific agent and come up with a financial overview of their assets and wealth. From that, they will make a plan that meets the needs of the client and go about strategically implementing that plan to both grow and manage the client’s overall wealth (the aspects of it that falls under the wealth manager’s purview).

The Level of Personal Involvement and Relationships Created

Asset management has a more concise system whereby the managers do not cultivate that much of a personal relationship with the client as most of the systems used are already in place and follow a specific set of guidelines.

Wealth management is all about getting a feel for what the client wants and what they need. In this case, the manager in charge will slowly but surely cultivate some level of trust with the client and form a strong bond as they try to work out the best way forward to keep the client happy and to secure their financial future.

It is safe to say that the main difference between asset management and wealth management is almost always the human element involved. In asset management, your managers have systems set up to invest your money and try to make you as much profit as possible.

In many cases, asset management clients are high net-worth individuals who would rather let their money do their work for them without much involvement. Wealth management, on the other hand, is all about finding out what the client needs and coming up with a plan that will realistically help them secure that ideal financial future.

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