Investment Management Services: What Investors Should Know
Managing investments involves ongoing decisions about how assets are allocated, how much risk is appropriate, when a portfolio may need adjustment, and how investment choices fit with other financial priorities.
Investment management services provide a structured process for addressing these decisions. For individuals and families with multiple accounts, changing income needs, or significant assets, understanding how investment management works can help when evaluating an advisory relationship.
What Are Investment Management Services?
Investment management services generally involve developing and managing a portfolio based on an investor's goals, time horizon, risk tolerance, and financial circumstances.
Depending on the relationship, this may include:
Developing an asset allocation strategy
Selecting investments
Diversifying across asset classes
Monitoring portfolio holdings
Rebalancing when appropriate
Evaluating investment risk
Considering tax implications
Adjusting the strategy as financial circumstances change
At VestGen Wealth Partners, investment portfolios are personalized based on each client's goals, objectives, time horizon, and risk tolerance. Portfolio monitoring provides an ongoing opportunity to evaluate whether adjustments may be appropriate as circumstances evolve.
How Is an Investment Strategy Developed?
An investment strategy begins with understanding what the assets are intended to support.
Someone accumulating wealth for retirement over several decades may have different investment considerations from a retiree taking regular portfolio withdrawals. A business owner preparing for a future transition may have different liquidity needs from an executive with a significant portion of wealth concentrated in company stock.
An advisor may consider financial goals, time horizon, income needs, existing assets, liquidity requirements, tax considerations, and risk tolerance when developing an investment strategy.
These factors help inform decisions about the appropriate allocation among stocks, bonds, cash, and other investments.
Why Does Diversification Matter?
Diversification involves spreading investments across different assets, industries, companies, or market segments.
Different investments can respond differently to economic and market conditions. A diversified portfolio can help manage exposure to the risks associated with individual holdings or market segments. Diversification does not eliminate investment risk or prevent losses.
VestGen Wealth Partners incorporates diversification across asset classes when developing investment portfolios, with the specific allocation guided by the client's individual circumstances.
How Does Investment Management Fit Into Financial Planning?
Investment decisions frequently connect with other areas of a financial plan.
Selling appreciated investments can have tax implications. Retirement withdrawals may affect taxable income and future portfolio needs. Concentrated positions can influence portfolio risk. Estate planning decisions may affect how investments are owned and eventually transferred.
VestGen Wealth Partners integrates investment management with financial planning areas that may include retirement, tax planning, estate planning, insurance, education planning, and cash flow. Looking at these areas together can provide useful context when investment decisions are being evaluated.
Questions to Ask About Investment Management Services
Before selecting an investment advisor, useful questions include:
How will my investment strategy be developed?
How do you determine asset allocation?
How often will my portfolio be reviewed?
What circumstances may lead to portfolio changes?
How do you approach diversification and investment risk?
How are fees calculated?
How are tax considerations incorporated?
How does investment management coordinate with financial planning?
These questions can help clarify the advisor's process, responsibilities, services, and fees before establishing a relationship.
Conclusion
Investment management services provide an ongoing framework for developing, monitoring, and adjusting a portfolio based on an investor's financial circumstances. Goals, risk tolerance, time horizon, liquidity needs, taxes, and other financial priorities can all influence how a portfolio is structured.
At VestGen Wealth Partners, investment management is coordinated with broader financial planning considerations, allowing portfolio decisions to be evaluated within the context of each client's financial life.
Frequently Asked Questions
What are investment management services?
Investment management services typically include developing, implementing, monitoring, and adjusting an investment portfolio based on an investor's goals, risk tolerance, time horizon, and financial circumstances.
What does an investment manager do?
An investment manager may develop asset allocation recommendations, select investments, monitor holdings, rebalance portfolios, and evaluate investment risk over time.
How often should an investment portfolio be reviewed?
Review frequency depends on the investor and the advisory relationship. Changes in goals, income needs, time horizon, liquidity requirements, or risk tolerance may also create a reason to revisit the portfolio.