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What is Private Asset Management?

Jim B.
Jim B.

Private asset management is the process by which a financial institution tracks and manages the financial assets of a particularly wealthy individual. Such individuals may have amassed a great deal of assets over the course of a lifetime but lack the wherewithal to manage all of this wealth properly. As such, these individuals may seek out private asset management to make sure that their wealth not only lasts for themselves, but also for their families and descendants. For this reason, private asset managers take care to invest the money wisely and attempt to keep it free from excessive taxation through a variety of methods.

It is common to think of asset management as being something that big businesses, which make transactions involving huge amounts of money seemingly all the time, need to undertake. There are certain individuals who come into the kind of wealth that requires asset management as well. This is because such wealth often comes from multiple sources and can be difficult to manage for anyone but a financial professional. That is one reason why wealthy individuals might seek out private asset management.

Businesswoman talking on a mobile phone
Businesswoman talking on a mobile phone

The goal of private asset management is to meet the requirements that an individual has of the wealth that he possesses. For example, some people might want to live modestly but save larger amounts for beneficiaries like family members or charities. Others might wish to be more aggressive with the wealth that they've already accumulated. As such, financial institutions that act as private asset managers tailor their services to what their clients need.

Investment opportunities are a major portion of any type of private asset management. Since the individuals in question have significant capital to invest, these opportunities often go beyond simple stocks and bonds. Private asset managers may seek out more complicated investment vehicles like derivatives to try to create the most potential profit for the client. In addition, asset managers must always be cognizant of the level of risk that the client is willing to incur before proceeding with any potential investment.

Much of the focus of private asset management is on providing for the individual after he loses the ability to continue earning large amounts of capital. Retirement income is a must for wealthy individuals, both for themselves and their beneficiaries. Private asset managers often look to estate-planning devices like trusts as a way to shield wealth from excessive taxation. Trusts are a way in which wealth can be protected and yet still grow in the future via wise investment policies.

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