Asset Management: Get Expert Help To Manage Your Money.

Asset management is a giant business. In 2019, the top 500 largest asset managers worldwide oversaw $104.4 trillion worth of assets, according to Thinking Ahead Institute by Willis Towers Watson.

These stratospheric numbers might make the term asset management seem way beyond your world. But asset management is a financial service that can benefit those with small or huge net worths.

What is Asset Management ?.

Asset management is the service of managing a client’s money. At its core, that means identifying a client’s financial goals and then working to accomplish those goals via portfolio management—buying and managing stocks, bonds and funds.

Asset management clients can range from regular people to nonprofit organizations and public companies large and small. Similarly, companies that provide asset management services can be huge corporations or one-person operations.

An asset manager is a financial professional who manages money and securities on behalf of a client, with the goal of growing the value of the assets. Asset managers are known by many names: investment advisors, financial advisors, wealth managers, institutional wealth managers, registered investment advisors (RIAs), robo-advisors and stockbrokers, to name just a few.

“The financial industry uses a lot of buzz words with asset management, and it’s confusing,” says Caroline Hill, a wealth manager at Sage Rutty Inc., a financial services company based in Rochester, N.Y. Here’s how Hill breaks down the different asset managers that cater to regular investors.

How Much Does Asset Management Cost?

Costs vary for asset managers and asset management strategies. An active investing model, for instance, will have greater costs than passive, index-based investing model.

Here’s how the most common asset management costs break down:

Active investment management fees. These fees can vary, depending on the asset manager and the amount of assets in an investment portfolio. Typically, asset managers charge a 1% annual fee. That means an investment portfolio of $100,000 would cost $1,000 annually for advisory fees.

Passive management fees. Asset managers who use a passive investment model, meaning they place client money in index funds that mirror major benchmarks, like the S&P 500, cost less on an annual basis. Common passive management fees range between 0.20% and 0.50% on an annual basis, so $200 to $500 each year for a $100,000 portfolio.

Robo-advisor management fees. Asset managers at so-called robo-advisor investment firms use algorithms to manage client portfolios instead of humans. Typical annual asset management fees for robo advisors range between 0.25% and 0.50% of managed assets on an annual basis. This works out to $250 to $500 per year for a $100,000 portfolio.

Brokerage fees. Investment brokers who make trades on behalf of a financial client may charge a per-trade transaction fees, which can be as low as zero (for online trades) and as high as $50 per trade, depending on the broker and the type of service provided.

Additional fees. Asset managers may also charge annual account fees, ranging from between $25 and $100 annually. If a client closes an account, an asset manager may charge a closing fee ranging from $25 to $150 per account.

Keep in mind, if you use a professional asset manager, you may not actually use any one model exclusively. “The advisor may use a low-cost, more passive manager for a portion of the assets and a different, more active, high feature management company for a different portion of the assets,” Alexander says. “This helps keep overall costs down and maximize the value for the services and performance clients receive.”