Direct Tax Services
Select Your Location
Confusion prevails between the two processes or services of asset management and wealth management because of the nature of financial services offered by them. However, there exists a significant difference between the two processes in terms of their meaning, objectives, scope of their activities, legal responsibility in the execution of the two processes. This piece of writing discusses the meaning and the major differences that exist between asset management and wealth management.
Table of Contents
The process of managing an individual’s investments in the form of stocks, bonds or any other kind of instrument in order to grow their net worth is called asset management. The goal of asset management is to maximize the returns on the investments made by an individual. In other words, the money of the client needs to be put in an efficient manner so that the money invested makes even more money. Asset management caters to a class which is at the higher degree of affluence and is not limited to any specific class of financial assets but caters to all the client’s financial investible assets.
In the process of asset management, the asset manager determines investment of the client’s assets based on the financial situation of the client and then offers an investment strategy in order to maximize the returns of the client by indulging in the process of asset allocation. In asset allocation, the asset manager divides the investable assets among different asset classes. For example what percentage of the portfolio should comprise of products like stocks, fixed income products like bonds etc.
The scheme of investment which is adopted by high net worth individuals to preserve their wealth and also to accumulate it further is called Wealth Management. Wealth management involves active participation by such individuals to identify and take advantage of the profit making opportunities. This kind of management of wealth is meant for those individuals who have accumulated significant amount of wealth either through business or through inheritance.
Wealth management involves appointment of wealth managers by such wealthy people in order to preserve and accumulate their wealth. Some of the common activities that form part of a wealth management scheme involves capital gains assessment, estate planning, risk management and last but not the least tax management.
Following are the major differences that exist between asset management and wealth management:
In the process of asset management, the manager manages the investment in equity, fixed income securities, real estate etc. with a view to maximize the returns on the client’s investment. On the other hand, in the case of wealth management, the wealth manager oversees all the financial aspects of the client which may include management of assets, taxes, cash flows, estate and other uses of money. This means asset management is a subset of a bigger management process of wealth management where wealth management takes a holistic view of the client’s finances. It is on this basis, that the client needs to decide between the services of asset management and wealth management.
Read Our Article: Asset Management: Alternative Investment Funds
Prabhat has done his BA LLB (Hons) and has been writing research papers since his law school days. His interest in content writing made him pursue a career in legal research and content writing. His core areas of interest are indirect taxes, finance and real estate.
The Reserve Bank of India, in its press release dated June 8, 2023, issued Statement on Develop...
RBI released a developmental and regulatory policy statement on June 8, 2023. The objective of...
Financial Institutions called Asset Reconstruction Companies ("ARCs") reconstruct and securitis...
Any person booked for an offence under the Criminal Procedure Code (CrPc) / the Code would be r...
The Reserve Bank of India regulates Non-Banking Financial Companies in India, and they are subj...
The Reserve Bank of India regulates Non-banking Financial Companies in accordance with the RBI...
Incorporation of a Limited Liability Company (LLC) is an attractive choice for small business o...
The Reserve Bank of India (the Bank) issued Non-Banking Financial Companies Acceptance of Publi...
A few years ago, investing in traditional investment categories like shares, bonds, real estate...
Compared to other organisations, the corporate governance of Non-Banking Financial Companies is...
Are you human?: 9 + 6 =
Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality
What is Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)? It is one of the government-sponsored...
21 Jun, 2020
The Finance Bill 2022 has proposed for numerous amendments to the Income Tax Act 1961. These amendments can have a...
23 Feb, 2022
Red Herring Top 100 Asia enlists outstanding entrepreneurs and promising companies. It selects the award winners from approximately 2000 privately financed companies each year in the Asia. Since 1996, Red Herring has kept tabs on these up-and-comers. Red Herring editors were among the first to recognize that companies such as Google, Facebook, Kakao, Alibaba, Twitter, Rakuten, Salesforce.com, Xiaomi and YouTube would change the way we live and work.
Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers.
Stay updated with all the latest legal updates. Just enter your email address and subscribe for free!
Chat on Whatsapp
Hey I'm Suman. Let's Talk!