Asset Management Awareness Month
What is asset management, why is it important, and how can we help?
Asset Management Awareness Month
Asset Management Awareness Month begins in March! Throughout the month business, organizations, and individuals are encouraged to develop a better understanding of asset management, honor those working in the profession, and increase their focus on the importance of proper asset management. The National Property Management Association (NPMA) sponsors the event and provides many free resources throughout the month. We wanted to take advantage of this time to help our clients to better understand what asset management really means, how creating a plan helps manage your assets, and how our team may help with this process.
What is an asset?
According to Investopedia, an asset is “anything of value or a resource of value that can be converted into cash.” Some examples of assets include: real estate, personal property such as a boat, car, jewelry and collectibles, and, of course, investments. Asset Management helps determine what is the short, medium, and long-term value of these goods and also whether you are properly diversified across all of your assets.
What is asset management?
Asset management is when a financial institution takes control of managing part or all of a client’s portfolio. This is typically done either by an investment bank or a personal financial advisor. Asset managers typically have two goals:
1) First, to grow or preserve a client’s portfolio over time.
2) Second, to mitigate risk.
For some clients one of these priorities may be of greater importance. For example, it is common that younger clients typically look to take risks in exchange for potential higher returns while for retirees’ preservation and protection of their assets may be of greater importance. Though, this “rule of thumb” is not always true, which is why it’s important to take a risk assessment, like the complimentary one we offer here. Asset managers help their clients to determine what assets to buy or sell while considering both micro and macro-economic trends, market conditions, risk tolerance, and much more. While many people initially feel as though they might be able to manage their own finances, as their assets grow and their lives become more complex, it is not uncommon for individuals and families to seek out the help of a professional. The same way our bodies often need more medical attention from physicians as we age, our assets often need greater financial attention as they grow. This is particularly true as clients approach retirement age. A financial advisor can help them to understand when they can retire, how much they can afford to spend in retirement, whether or not they’ll be left with money for their beneficiaries, and much more.
Why is asset management important?
Asset management is important for a variety of reasons.
1. Account for all of your assets and see them holistically.
As we go through life, we begin to accumulate many assets often completely separate from one another. Many people find that they have many assets that they don’t actively manage or even that they’ve forgotten about entirely. For example, when you left your last employer, you likely had a 401(k), 403(b), or another form of employer-sponsored plan. If you did not roll over your account to another institution, that likely means that your account is still with your previous employer and may not be truly actively managed. Rather you may be passively invested in your original investment choices, which could be from years ago. On the other hand, if you improperly handle your 401(k) and unknowingly elect for a “lump-sum distribution” into your checking or savings account instead of a rollover, you will then likely be required to pay income tax on the money as well as a 10% penalty if you are below the age of 59 ½. These are all areas of expertise for financial advisors. They can help you to account for all of your assets (and liabilities) and enable you to view them in a holistic way. Essentially, they can help to answer the question, how will all these different assets be used in retirement, when, and what financial or tax implications may you expect.
2. Improve cost efficiency.
Assets that are properly managed by professionals can save money on maintenance. While these savings may seem nominal in the short-term, they can accumulate to substantial savings in the long-term. Good asset management can eliminate the costs associated with under-maintenance or over-maintenance. Advisors and other financial professions have the tools and the knowledge necessary to manage your assets in the most cost-effective way.
3. Incorporate goals-based planning.
Some advisors, including those at Johndrow Wealth Management, take a holistic, goals-based approach to financial planning and asset management. While in the past, investment management and financial planning were often seen as separate services for different types of clients, these tools are often best used in tandem to help clients take account of their assets, manage them successfully, and plan for future financial obligations and goals. Our advisors can help you to understand if your current asset management strategy positions you well to reach your goals, both in the short and long-term.
4. Ensure optimization and gain experience.
Asset optimization is a practice focused around making strategic improvements to the overall effectiveness of your asset management strategy. Our team has years of industry experience under their belts. When put together, our experience alongside our resources and tools can go a long way in helping to optimize your asset management strategy to cut costs and drive returns.
5. Gain confidence.
One of the most common reasons people seek out financial guidance and asset management services is for confidence in their future. While some people could likely get by managing their assets on their own, it is certainly not easy and can contribute to a state of constant financial concern. An advisor is there to coach you through those difficult times of market volatility to stick with your well-developed plan. In fact, even some of the most successful financial advisors allow others to help them in managing their money. At the end of the day, most people don’t want to spend their free time managing their investment portfolios, and most people don’t actually have the knowledge or tools to do so successfully. Working with a financial professional for your asset management needs can give many people the confidence they’re looking for as they can rest assured that someone else is managing their investments to ensure they will be able to meet their financial goals when the time comes.
So, how can our team help?
Asset management clients at Johndrow Wealth Management have access to a variety of resources including experienced portfolio construction, professional investment research, formal reviews, and exclusive investment benefits including access to the lowest costing investment share class, account aggregation, tax loss harvesting, and much more. We treat our clients like family and our advisors put you first. We offer investment management services, financial planning, consulting, and even a subscription service for those looking for regular financial advice that maybe aren’t ready to have their assets managed.
If you or someone you know might be interested in learning more about any of these services, you can schedule an introductory phone call with one of our advisors at: https://www.johndrowwealth.com/services. Regardless of your current financial needs, Asset Management Awareness Month is a great time to learn more about asset management and why it is important. Keep an eye out for all the great tips we will be sharing throughout the month through LinkedIn, Instagram, Facebook, and more.
Written by Kaitlyn Keeler
Kaitlyn is an enthusiastic client service intern that assists our advisors with your accounts. She is an attentive business student with a concentration in finance.
