What is Asset Management - How to Build Your Business?

Growing wealth requires advanced asset management, whether to grow your money or manage your clients’ accounts. Managing financial assets requires advanced analytical, negotiation and forecasting skills to lead and boost someone’s financial portfolio.

Individuals and companies seek professional advisers to overlook their assets, ensure their liabilities do not exceed their incomes and secure long-term stability.

In exchange, advisers earn commissions, managerial fees and other arrangements that incentivise them. Let’s unpack more details and explore how you can become an asset manager yourself.

Asset management is the art of managing and growing a financial portfolio. It includes various buying, selling, trading and taking risks regarding underlying assets to sustain and improve the account’s value.

Experts undertake these activities to boost their own funds. However, they can offer these services professionally to earn significant returns. 

Asset managers can work independently and serve multiple clients simultaneously or within a financial institution that holds a huge number of accounts belonging to multi-million dollar companies and entities.

Even the most proficient traders and business owners entrust financial asset management over their funds to invest on their behalf and grow money consistently across a predetermined number of years.

Administration of assets is the main task of an asset manager, who aims to grow a portfolio’s value through professional financial services. These include researching the market, choosing securities, determining the risk factors and making investing decisions.

They provide finance advice that aligns with the client’s expectations and objectives and undertake portfolio activities according to market conditions and trends.

Asset managers are reported to make up to $100,000 in the US, while senior managers exceed the $100k threshold. These figures come from the multiple income sources a financial manager can utilise.

The global enterprise asset management industry is one of the largest and most critical sectors, with hundreds of billions poured into this space.

The market was estimated at $505 billion in 2023, which jumped by 35.64% in 2024 to $685 billion. This trend is expected to keep growing between 2024 and 2033 by a CAGR of 35%, potentially reaching $10,480 billion in the coming ten years.

North America is the largest contributor to asset management, nearly occupying 40% of the entire industry due to its sophisticated wealth asset management infrastructure, the rise of digital assets and the centralised banking expansions into DeFi assets and Bitcoin ETFs.

You can become an asset manager and serve a wide variety of services based on the financial assistance required, portfolio control level, and various other factors.

A brokerage is an entity undertaking financial decisions on the client’s behalf. Brokers can execute trading orders, buy and sell stocks, currency pairs and other securities, as well as provide asset custodian services.

These intermediaries may not always put the client’s interests first, as they process orders placed by users regardless of their outcomes.

Advisers are professionals who accumulate years of experience and obtain high-class certifications to provide financial assistance like asset planning, investment consultancy, and advice on other financial decisions.

Most financial advisers act in good faith and in the user’s interest, utilising their intelligence to offer strategies that minimise tax implications.

RIA - a registered investment adviser, is a legal entity that provides portfolio management and trade consultancy. The US Securities and Exchange Commission closely regulates RIAs, requiring registration with national records if an entity is managing over $110 million in assets.

A registered investment adviser works with extremely wealthy accounts and firms, offering investment strategies and access to trading venues.

Automated algorithms and artificial intelligence technology entered asset management, offering human-less financial services that are much faster, more accurate and void of emotions.

Robo-advisers are computer-based algorithms that analyse, manage, trade and boost a user’s portfolio according to predetermined conditions. However, it requires an advanced skillset and knowledge to insert these inputs and update them based on market dynamics and changes.

Starting an asset management firm requires advanced experience, relevant certifications, professional relationships and market knowledge. Combining these qualities will ensure smooth business operations, where you can diversify your income and grow your wealth. Here’s how you can start.

Understanding and choosing your specialisation is the most crucial factor in determining your goals and objectives. Your selection criteria must consider your interests, market gaps and available resources. Here are the most common ones.

Each comes with its own benefits and challenges, and you must carefully consider the legal aspects, market conditions, restrictions and supply and demand to predict your success.

Familiarise yourself with applicable laws. Your local jurisdiction may require you to obtain certain licenses like CFP, CFA, CAIA or RIA.

CFP - Certified Financial Planner - is designed for wealth asset managers focusing on retirement planning and capital strategies.

CFA - Chartered Financial Analyst - is a highly respected license that covers investment analysis and successful portfolio management.

CAIA - Chartered Alternative Investment Analyst - is a license given to non-traditional investments like hedge funds, private equity and property.

RIA - Registered Investment Adviser - is a regulatory requirement by the SEC for entities managing portfolios of over $110 million in assets.

Get a deep understanding of current market conditions, including competition, local economy, demands, and technological advancements.

Economic indicators, like inflation, interest rates and unemployment, play a significant role in your business as investors determine their expenses based on the macroeconomic state. Therefore, analyse financial reports, monitor local and global news and follow expert opinions.

Understand the current asset management system, find market gaps and develop products and services that suit potential clients. Get access to local research capabilities, databases, and resources to better shape your business plan.

Build a solid tech stack to centralise and streamline your operations. This includes getting back-office CRM software to store and track clients’ data and activities.

You can also utilise asset management-specific programs like Black Diamond and Orion to monitor portfolio updates, accounting metrics and market changes. Using such software simplifies managing multiple clients at the same time and saves communication and reporting time.

You can also generate customised reports to make fact-based decisions, such as scaling your operations and optimising resources.

Managing financial portfolios entails communicating with highly-regarded individuals and companies. Therefore, establishing and maintaining long-term relations with a network of professionals is your way to reach your target market.

Attend industry events, forums, exhibitions and associations to connect with professionals online and offline and build a community of like-minded personnel who can become your customers or refer clients.

In your journey as an asset manager, you will face many challenges that will define your resilience and proper planning. At the same time, there are various benefits that you will enjoy, starting from diverse income sources. Here are some expected advantages and disadvantages.

Asset management services involve leading and boosting a financial portfolio based on agreed-upon objectives, risk tolerance and market conditions.

Setting up your firm requires significant research, preparation and financial analysis to determine your goals and objectives. Then, adopt a technological foundation and deploy your marketing strategy to put your name out.

Since this space is crowded with affluent asset management firms, you must engage in relevant associations, forums and exhibitions and build a professional network to find and reach your target market.