YOGYAKARTA - Many people in this era flocked to invest so that the future would be better. Of course, investing itself has become a trend that is very popular among today's people. But have you ever heard of the term what is an investment manager?
What is Investment Manager
Investment managers are people or organizations that make investment decisions about securities portfolios in the client's name based on the client's objectives and investment parameters that have been determined by clients.
Investment managers can handle all activities related to client portfolio management, from purchases and sales of daily securities to portfolio monitoring, transaction settlements, performance measurements, and regulatory and client reporting.
Investment Manager Understanding
Investment managers can range from one or two offices to large multi-disciplinary companies with offices in several countries. Investment managers usually base the costs they charge clients on the percentage of client assets being managed.
For example, an individual with a portfolio of $5 million handled by an investment manager who charges 1.5 percent per year will pay a fee of $75,000 per year. According to Willis Towers Watson, in 2020, the four largest investment management companies in the world based on AUM are BlackRock Inc. for $7.4 trillion, The Vanguard Group for $6.2 trillion, State Street Global Advisors for $3.1 trillion, and Fidelity Investments for $3 trillion.
Investment Manager Type
Investors must understand various types of investment managers. Certified financial planners usually develop holistic financial plans for investors who consider information such as future revenue, expenses, and cash needs when planning a portfolio. However, financial advisors are often stock brokers. Portfolio managers directly invest investor capital to achieve positive investment results.
Currently, the industry is changing and financial advisors can now become personal financial consultants working with stockbrokers. Additionally, Robo-advisors are fintech platforms that leverage technology and investment knowledge to notify individuals about their money and investment and provide auto-investment management on behalf of ordinary investors.
Factors to Consider When Choosing Investment Managers
Investors should determine what type of investment manager they need. This may depend on what stage they have achieved in the financial planning process. For example, an investor who just started his savings trip may not need the services of a portfolio manager. Instead, he would be better off with a Certified Financial Planner (CFP), who can teach him the basics of retirement planning. Instead, investors who have the remainder of income after being saved and want to invest in a better securities with portfolio manager.
A background check of professional regulatory qualifications for investment managers will express previous complaints and ensure managers have the necessary skills and experience. Most investment managers and funds outline their investment philosophy on their site or brochures. Investors must determine whether the philosophy (and level of risk) is in accordance with their goals.
Investment managers should be easily contacted and consider client specific needs. Since financial needs continue to change, investors should feel comfortable contacting their investment manager in a short time to adjust the service.
Examples of Investment Manager
Galih and Ratna are both 30 years old and are looking forward to their first child. They have some savings being stacked but also have other commitments, such as paying a mortgage at their new home.
They are not sure if the available cash is enough to help them plan a new arrival. They consulted with the Certified Financial Planner (CFP) to help plan their finances.
The CFP suggests various options, such as setting aside cash for education funds, to help them plan children.
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