Asset Management vs Wealth Management

Sean Sevey |

Asset management and wealth management are both financial services that involve managing and optimizing a client's financial resources, but they focus on different aspects and serve different purposes. Here's an overview of the key differences between the two:

**Asset Management:**

1. **Focus:** Asset management primarily focuses on managing and optimizing a client's investment portfolio. The goal is to achieve the highest possible returns within the client's risk tolerance and investment objectives.

2. **Scope:** Asset management involves the active buying, selling, and monitoring of a variety of financial assets, such as stocks, bonds, mutual funds, exchange-traded funds (ETFs), and other investment products.

3. **Client Base:** Asset management services are typically offered to a broader range of clients, including individuals, corporations, institutions, and even government entities.

4. **Services:** Asset managers analyze market trends, economic indicators, and investment opportunities to make informed decisions on behalf of their clients. They may offer both actively managed and passive (index-based) investment strategies.

5. **Fees:** Asset management fees are usually based on a percentage of assets under management (AUM) and may also include performance-based fees. Clients pay for the professional management of their investment assets.

**Wealth Management:**

1. **Focus:** Wealth management takes a more holistic approach, focusing on the overall financial well-being of the client. It encompasses a broader range of financial services beyond just investment management.

2. **Scope:** Wealth management includes not only investment management but also financial planning, tax planning, retirement planning, estate planning, risk management, and more.

3. **Client Base:** Wealth management services are typically targeted at high-net-worth individuals and families who have substantial financial assets and complex financial needs.

4. **Services:** Wealth managers work closely with clients to develop comprehensive financial plans that align with the client's goals and values. They consider a wide range of factors, including tax implications, estate distribution, charitable giving, and intergenerational wealth transfer.

5. **Fees:** Wealth management fees can be more comprehensive and may be based on a combination of AUM fees, hourly fees, or fixed fees for financial planning services. Since wealth management involves a broader array of services, the fee structure can be more customized to the client's needs. At Sevey Wealth, we utilize a fixed fee structure vs the traditional AUM model.

In summary, while both asset management and wealth management involve managing financial resources, asset management primarily focuses on optimizing investment portfolios, while wealth management takes a more comprehensive approach, addressing various aspects of a client's financial life beyond just investments. The distinction between the two often lies in the depth of services provided, the complexity of client needs, and the target client base.

At Sevey Wealth, we believe that all clients deserve a holistic and comprehensive wealth plan, including both an investment strategy as well as a strategy to reduce tax and fee inefficiencies. 

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