What is Investment Management? All You Need to Know in 2019 | Investera | Investment Portfolio Management Platform

What is Investment Management? All You Need to Know in 2019

10October, 2019

Investment management, also known as financial management, is a term widely used to define the supervision of different kinds of investments for high-net-worth individuals, companies, VCs, private equity firms or family offices. These different types of investments include assets, shares, bonds, and other securities.  

What does an investment manager do?

An individual or a specialized company can handle investment management, where they are responsible for overseeing all financial matters for the client’s portfolio, which can include investments, budgets, and taxes. 

An investment management company would also conduct analysis and recommend investments in specific markets or securities depending on market performance and predictions. Currently, many firms are reaching out to technology or artificial intelligence-based solutions that can offer real-time updates, automate reports, and assist in decision making. 

It is important to note however that investment management can be loosely translated within the industry, as it can carry different meanings for different people:

  • Investment management for VCs, private equity firms and high-net-worth individuals is synonymous with wealth management. In this case, an investment management company ensures that a client’s portfolio can grow while being handled efficiently. Often, venture capitalists and private equity firms hire investment management companies to assist them in managing all their finances effectively. 
  • Investment management for large companies. Investment management is also integral to companies when planning to expand. For example, if a company is planning to open a new franchise, it will need ready cash to pay for advertising, construction, new staff, and more, which can be readily available by an expert recommendation from an investment manager. The investment manager’s role in this scenario would be to analyze which investments would provide the optimal means of funding when converted to cash.  

How did investment management begin?

During the 1970s, family offices began hiring portfolio manager to manage their wealth. In 1985, the Investment Management Consultants Association was established in the United States of America, which set and unified the standard of professional investment managers. 

However, during the same timeframe, asset and wealth managers brushed new technologies in the sector under the rug. When online brokerages were first introduced, their traditional competitors called them “discount brokers” and dismissed their business model. Because of the emergence of these new tech-enabled competitors, the price that companies began charging per trade significantly dropped. That was not all. These new tech-competitors introduced new pricing models by splitting advice from transactions, which slowly put traditional portfolio and wealth managers out of business.

In 2019, the financial industry continues to grow, as new technologies known as FinTech (financial technology) aim to make financial management more efficient and accurate through sophisticated algorithms and artificial intelligence. 

Why wealth management platforms are becoming normalized

Portfolio managers could manage millions of dollars for more than one account, which can be overwhelming when adding the different markets and types of investments of their clients. 

Traditional data-entry platforms require the manual entry of data, which is time-consuming, and therefore costly for all parties involved. Also, it leaves space for human error.

FinTech-enabled platforms that are catered for wealth managers or portfolio managers assist them in handling more than one account smoothly, as they can view and track all data through user-friendly generated reports. Find more information on investment management platforms here: https://investera.com/

All in all, investment management has been around for decades and can be used interchangeably within the financial industry. As the fourth industrial revolution paves the way for change across all sectors, emerging technologies are reforming traditional investment management as we know it, making it more efficient, reliable, and accurate.



Leave a Reply