Financial planning is one of those topics that should be covered in school, as everyone can benefit from having a good understanding of how to manage their own income, savings, investments, and expenditures. Even if you did learn some of these skills in school, a professional financial planner could take those skills one step further with expert advice on how to live now and plan for the future financially. No matter your income, current savings, or current life situation, a financial advisor will always be ready to assist with strategies for making the most of what you have, and maximising it in future.  

Here are some of the most frequently asked questions about financial planners.

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What is asset management?

Asset management is a financial service that can be carried out by asset management companies, or a private asset manager. Put simply, the goal is to take a client’s assets, and grow them. Typically, an asset manager job description will involve an array of tasks and responsibilities. They will often have power to withdraw funds, invest them in other areas, write cheques, and much more. And while the standard professional will work in investment management, there are different types of asset manager for different specialties. For example, asset management in real estate would deal solely with the property market. It’s a challenging job that must take into account the client’s preferences and level of risk they’re willing to take on, as well as wider factors such as the current financial and political markets. Asset managers will work with individuals, families, companies, not-for-profits, and everything in between.

What is the asset management process flow?

The asset management process flow is a way for asset management companies to organise their work. Usually, there are three basic steps in an asset management procedure: the set up, processing, and creating reports. During set up, an asset manager will look at factors such as accounts, depreciation books, and reporting elements to make a decision about how best to move ahead with a client’s assets.

The next step with a fixed asset management process flow is processing, which, for the asset manager, includes tasks such as making adjustments, disposing of assets, or transferring assets. In its final stages, asset management is about reporting and analysing, which measures the performance of the assets, presents them, and looks at areas for improvement. Different types of asset management and different asset management companies and professionals will all have their own systems in place, but most processes will at least include these three major components in some form or another.

What’s the difference between asset management and wealth management?

There are a lot of terms to learn when entering the world of financial services, and knowing the difference is important to ensure you know which service you need most. When it comes to asset management vs wealth management, keep in mind that asset management is simply a focused part of wealth management. Specifically, an asset manager will focus only on taking a client’s existing assets (such as savings, investments, and property), and maximising returns over time.

A wealth manager on the other hand, is focused on a broader range of areas, which can include assets, as well as things such as taxes, cash flows, and much more. Wealth management products are therefore more suited to clients who are looking for an overarching service in multiple areas of financial management, compared with a concentrated effort on growing assets.

For example, if you are only really looking at property, then an asset manager in real estate may be your best option.

How do I find an asset manager?

There is no right or wrong way to find an asset manager. The best asset managers can work privately for themselves, or as part of a larger company. The trick is to do your research before making a final decision, so you’ll have the best chance of finding a good fit for your needs. You can start by asking friends, family, and colleagues for recommendations.

You may even find that your workplace has its own asset management plan in place, so you could find out who, or which company, manages it. However, if you want to browse a wide range of asset management companies in one place, Yellow Pages is a good website to start with. Not only will you find all types of asset managers with one quick search, you can learn about their history, experience, and specialties, past client reviews, and about their contact details if you wish to reach out to find out more.

How much do I need for investment to become a client with an asset management company?

Some asset management companies will set a minimum investment amount for clients, while others might work a little differently. If you speak with an investment management group and realise you don’t have the required investment funds available to qualify (this could be an entry point of roughly $50,000), then you may be able to find a different company that pools together investors’ assets.

For example, perhaps a dozen people have $20,000 in assets each – investment options with some asset management companies might give these investors the opportunity to pool this wealth together to give the asset management firm more buying power to start with. In fact, some companies will pool resources even for those with higher assets, as it may help them achieve higher returns for everyone. When speaking with potential asset managers, the question of minimum investments is always a good one to begin with.

What questions should I ask my portfolio manager?

Whether you’re starting to search for an asset manager, or have recently hired one and want to prepare for your first meeting with a few wealth management questions to ask, there are a number of common queries that should help you to get a better understanding of the process and their services.

Here are a few to get you started:

• How does your payment structure work (fee-based or commission etc)
• Currently how do you decide where to invest?
• Have your current clients performed during ups and downs in the market?
• How do you choose stocks?
• How do you minimise risk in client portfolios?
• What are the main reasons you choose to sell assets?

These are just a few general questions to ask your money manager, but don’t be afraid to add your own questions, and ask for clarifications whenever needed to ensure you have a thorough understanding of asset management when you get started.

How much does it cost to hire an asset manager?

It’s hard to assign a specific cost to an asset manager in the same way you would, say, a painter. Asset management companies will usually charge an ongoing commission on the value of your account, or on the performance of your assets.

This could be as low as 0.2%, or as high as 2%, and it can also be affected by the type of investments in your portfolio, and the amount in your portfolio (higher value assets can often have lower commission rates).

Additionally, investment costs can sometimes also include a one-off set-up charge, consulting fee, or other singular payments. Asset manager fees are generally different from one client to the next, which is why it’s important to understand your financial planning ongoing service agreement before you sign.

What is the best asset management software?

Asset management software uses a variety of tools to help asset management companies, managers, businesses, and some individuals to optimise their processes. This begins with any purchases, includes maintenance, and helps to cover the disposal (sale) of assets, as well as a variety of other services related to asset management. An asset management system can therefore help you stay on top of your processes to maximise your (or your client’s) income.

Here is some of the most popular asset management software in Australia:

• Sage FAS
• AssetCloud
• IBM Maximo
• UpKeep
• PowerPlan Fixed Asset Suite
• BNA Fixed Asset Solutions

Each asset management program has its own unique products and services, and some may better suit your needs than others, so it will help to thoroughly research your options before making a decision.

• Is there a minimum investment I must have to work with you?
• Are you a fiduciary?

There are a lot of terms to learn when entering the world of financial services, and knowing the difference is important to ensure you know which service you need most. When it comes to asset management vs wealth management, keep in mind that asset management is simply a focused part of wealth management. Specifically, an asset manager will focus only on taking a client’s existing assets (such as savings, investments, and property), and maximising returns over time. A wealth manager on the other hand, is focused on a broader range of areas, which can include assets, as well as things such as taxes, cash flows, and much more.

Wealth management products are therefore more suited to clients who are looking for an overarching service in multiple areas of financial management, compared with a concentrated effort on growing assets.

Who needs an asset manager?

Practically anyone can use an asset manager. Asset management companies will work with anyone from individuals, to families, to companies, to major corporations. There is no defined number of zeroes your bank account must hit before you should look into asset management, but it’s safe to say that if you’re starting to accumulate wealth and/or assets and aren’t sure how to best maintain them and make the most out of them (grow them), then that could be a good time to consider the types of asset managers and how they might 

What does it mean to be a fiduciary?

Fiduciary simply means that if your asset manager is a fiduciary, then they have a legal and ethical duty to do their best for their client and work in good faith.

The fiduciary obligation means that an asset manager therefore must make decisions that are best for the client, rather than perhaps investing assets in areas that benefits the provider more than the client. A breach of fiduciary duty in Australia means that the provider can stand to become disqualified and face large fines, which is why professionals take their fiduciary responsibility very seriously with clients. Therefore, when searching for an asset manager, a fiduciary financial advisor can offer peace of mind that they will always act in your best interests.

What are fee-only rates vs commission for asset management companies?

Typical financial advisor fee structure will often be comprised of either fee-only rates, or a commission. As you might imagine, fee-only rates may include a standard start-up fee, then an ongoing flat annual rate.

A financial advisor commission percentage is a common payment structure that takes a small percentage (anywhere from 0.2 to 2%) from your asset worth as annual payment.

When you consider fee based vs commission based pros and cons, you’ll first need to get a good understanding of your asset manager’s terms, then run a quick calculation to see how much they might cost you per annum.

Standard fee may cost you more if you don’t have many assets, but a commission could be more costly if you’re investing a large amount of wealth. Financial advisor fees on average will therefore be different for everyone, so it’s a good idea to shop around to see what’s on offer, and which style will suit you best.

Are there any risks with asset management?

Working with asset management companies, it’s important to understand any asset management risks that come with this venture. Types of asset risk depend on the assets themselves, so this could be anything from the property market wellbeing (if you are invested in property), to share price volatility in an investment portfolio.

A good asset manager will have a risk management plan in place to help ensure any unpredictable or uncontrollable areas don’t cause too much damage should share prices drop etc.

For example, asset management companies may choose to spread your portfolio across numerous industries in case one industry should experience a dip.

When hiring an asset manager, ask them about their asset risk management to find out what they perceive as the biggest risks, and how they best protect you from them.