An overview of the most important things
- Asset management is an important financial service for managing and increasing wealth, both for private and institutional investors.
- Investment options include a wide variety of options such as stocks, bonds, real estate, commodities, cryptocurrencies, and more.
- Expenses For asset management, they vary, but are typically between 0.5% and 2% of assets under management.
- Tax benefits can be achieved through strategic investments and the selection of suitable investment options.
- At the choice of asset manager transparency, experience, investment strategies and communication should be considered.
Definition: What is asset management?
Asset management is the professional management of assets by an asset manager. The aim is to preserve and increase assets in line with the client's financial goals and willingness to take risks — by investing in Investments such as stocks, bonds, or real estate.
How does asset management work?
Asset management works by a professional asset manager developing tailor-made investment strategies based on the client's specific needs and goals. This includes the selection of investments, continuous monitoring of the portfolio and, if necessary, adjustments to ensure that assets grow efficiently and that risks are controlled.
Asset management process:
- 1. Goal definition: The client and the asset manager clarify the financial goals and risk horizon.
- 2. Strategy development: An investment strategy is developed based on the objectives.
- 3. Investments: Selection of asset classes that diversify the portfolio.
- 4. Monitoring: The portfolio is regularly monitored and adjusted as required.
Diverse investment options in asset management
Asset management comprises a variety of investment options that are tailored to the client's needs. Die most important investments include:
- stocks: Investments in companies that offer potentially high returns but are also associated with higher risk.
- Bonds: Bonds that offer a fixed interest rate and tend to be safer than stocks.
- real estate: Direct or indirect investment in real estate as stable investments.
- raw materials: Investments in natural resources such as gold, oil, or other raw materials.
- Liquidity: Savings accounts, call money accounts, money market and fixed-term deposits that bear less risk but also offer lower returns.
- Cryptocurrencies: Digital currencies such as Bitcoin or Ethereum, which represent volatile but potentially highly profitable investment opportunities.
Investment strategies in asset management
Asset management can be carried out in various ways, depending on the client's needs:
- Active asset management: The asset manager regularly makes decisions to adapt the portfolio to current market conditions.
- Passive asset management: Here, investments are made in broad market indices without frequent adjustments, which results in lower costs.
- Unit-linked asset management: Investments are invested in specific funds that follow specific investment strategies.
- Sustainable asset management: Focuses on investments in companies that meet high environmental, social and governance (ESG) standards.
Models of cooperation with an asset manager
The choice of management model depends on personal preferences and the desired control over assets:
- Discretionary asset management: The asset manager makes all decisions without consulting the client.
- Advisory asset management: The asset manager makes recommendations, but the client decides.
- Hybrid models: A mix of both, in which the asset manager makes decisions but communicates regularly with the client.
What is an asset manager?
Ein asset manager is a professional advisor or an institution that manages its clients' assets. They develop investment strategies, make investment decisions and monitor portfolios to ensure that wealth grows and risks are minimized.
Important tasks of the asset manager:
- Strategy development: Tailored investment strategies based on the client's goals.
- Portfolio management: Selection and adjustment of investments.
- Risk management: Monitoring and minimizing risks.
- Tax advice: Optimizing the tax burden and taking advantage of tax benefits.
When does asset management start to pay off?
Asset management makes sense for assets of around CHF 500,000, as the services and fees for smaller assets are relatively high. For larger assets, however, professional management can be crucial in order to protect and increase capital in the long term.
Other important factors:
- Complexity of finances: When your financial matters become complex (such as multiple sources of income, international investments, or real estate holdings), an asset manager can help coordinate everything effectively.
- Lack of time: If you don't have enough time to actively engage with your investments or regularly monitor the market, working with an asset manager can provide relief.
- Growth goals: If you not only want to protect your wealth, but also want to expand it in a targeted manner, a professional asset manager offers expertise to develop optimal investment strategies.
- Ensuring succession planning: An asset manager can help organize long-term succession planning and asset transfer, which is particularly important for larger assets.
- Risk and tax optimization: If you lose track of the risks of your investments or are looking for ways to optimize your tax burden, an asset manager can provide valuable support.
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Benefit from transparent, objective and individually tailored asset management. As an independent asset manager in Switzerland, we at Format focus on your goals. Schedule a conversation today! Non-binding and free of charge.
What should you pay attention to when choosing an asset manager?
When choosing an asset manager, the following points should be considered:
- Experience and reputation: The asset manager should have many years of experience and a good reputation in the market.
- Investment strategy: Does the asset manager's strategy match their own goals and risk preferences?
- Transparency: Is the asset manager transparent with regard to fees, investment strategies and portfolio management
- Customer service and communication: Is regular contact maintained and is the customer involved in important decisions?
- Certificate of achievement: The asset manager should have a relevant track record (e.g. publicly available fund, the relevant investment).
- Conflict of interest: An asset manager should absolutely not require retrocessions so as not to create a conflict of interest among clients. (Banks such as UBS AG, cantonal banks, private banks Julius Bär, Raiffeisen, Vontobel AG, Migros Bank AG, LLB, VPB, LGT, etc. are understandably under increasing attack on this issue)
- Approval: Which regulatory authority or supervisory authority does the asset manager report to?
Tip: Make sure the asset manager is independent
An important aspect of choosing an asset manager is his independence. An independent asset manager has no interests of its own that could conflict with those of the client, such as selling its own products. This ensures that the recommendations and investment strategies are truly in the client's best interest and are not influenced by external interests.
What does asset management cost?
The costs of asset management vary depending on the model and scope of services. Typically, Management fees as well as Success fees raised.
- Administrative fee: Between 0.5% and 2% of assets under management annually.
- Success fee: 10% to 20% of the return, which is above the agreed benchmark.
What are the tax advantages of asset management?
Good asset management can offer tax advantages through targeted tax strategies. This includes the Capital gains tax, which can be optimized by choosing the right investment products, and using tax allowances. Through our network of tax advisors and lawyers, at home and abroad, Format Vermögen & Anlagen AG offers added value in asset structuring and succession planning.
Format: Asset Manager of the Year 2024 (winner over 24 months)
Format was named “Asset Manager of the Year 2024” by BILANZ. Our strategies have repeatedly achieved 1st places in various risk categories. More about this in the article “Hunters of Profits” (BALANCE SHEET 03/2024). Interested in a free initial consultation? Contact us and find out how we can successfully manage your assets. Get in touch now!
Format Vermögen & Anlagen AG holds a FINMA license as a wealth & asset manager for collective investment schemes.
