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What Is Asset Management?

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What Is Asset Management? As a client, you give asset managers power of attorney so that they can make investment decisions for you on their own. As an investor, you will then not only have a financial advisor, and you will also leave your money to an asset manager. Of course, you can set a specific framework for your asset manager.

CRUCIAL! To secure the management of the assets in the event of one’s legal incapacity, an asset manager is not necessary. Often the essential precautions can also be taken with a health care proxy.


The work of the asset managers (also portfolio managers or wealth managers) goes beyond financial investments in that they also monitor and manage the assets. In general, a distinction can be made between asset management for institutional and private investors

What Is Asset Management?

Institutional and Private Asset Management

Institutional investors such as insurance firms, companies or foundations employ asset managers to optimize institutional assets along with investment strategies. In particular, wealthy private investors hire a portfolio manager because it would be too time-consuming to manage their assets independently.

Standardized And Individual Asset Management

For private investors, it is possible to choose between standardized and individual asset management. With standardized asset management, the manager manages a portfolio for a larger group of clients with similar investment goals.


Individual asset management, on the other hand, describes investment planning that the portfolio manager tailors exactly to the investor’s wishes, for example, with a view to the risk and return. He then invests in stocks, bonds, index funds and commodities such as gold. This individual investment advice is also known under the keyword discretionary investment advice.


Besides, it is good to know that if the asset manager becomes insolvent, you will not be liable with your assets. Instead, your money will continue to be held in accounts in your name during asset management.

Four Steps To The Right Asset Management

Finding the right asset manager is no easy task. These four steps can provide a framework for this process.

1 | When is asset management worthwhile?

Before you decide on a vendor, you should first consider whether asset management will even pay off for you. Some banks offer standardized asset management from a minimum amount of € 50,000, and digital asset managers (Robo advisors) are even much lower.


However, individual asset management should only be sought if the assets are more considerable. Minimum investment amounts of € 500,000 are typical here. Therefore, small investors should look for other solutions to invest their money profitably.

2 | Distinguish between real and fake wealth management

The term asset management is not legally protected. Therefore, when looking for asset management companies, you should pay attention to the designation financial portfolio management, which must be approved by BaFin. These asset managers are also known as real asset managers. In contrast to this, there is fake asset management, behind which mostly asset advice is hidden. Here you will only receive tips for building up your wealth, but you will have to buy and sell securities yourself.

3 | Features of good asset management

However, legal approval as a financial portfolio manager does not yet qualify a company as an excellent asset manager.


A better index is to look at the professional qualifications of your portfolio manager. The titles can recognize a specially trained financial analyst Certified Financial Planner (CFP), Chartered Financial Analyst (CFA) or Certified International Investment Analyst (CIIA).


Your impression is also important. Here you should make sure that your portfolio manager maintains a certain professional distance from you and does not come up to you with supposed insider tips. You can also recognize a good portfolio manager by his numerous, intensive questions and inquiries about your personal life and financial situation. You and the portfolio manager should also have a similar understanding of risk.

4 | Maximum asset management costs

If you hire an asset manager, in addition to the necessary fees – depending on the agreement – fees, profit sharing or flat-rate fees also apply. In principle, the rule of thumb here is that the fees based on the investment amount should not exceed 1.5% per year. With an investment amount of € 1,000,000, it is already € 15,000. For entrepreneurial families, in particular, it is, therefore, worthwhile to set up a family foundation or a family office above a certain level of family assets.

What Is Asset Management?

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