What Is Investment Management and Do You Need It?

Businessman analyzing investment charts on document paper and using laptop computer at office.
Natee Meepian / iStock.com

Investment management refers to the professional handling of an investment portfolio. Individuals and institutional investors use investment management to make the most of their money. If you don’t have time to manage your investments or aren’t confident about making investment decisions independently, an investment manager can help.

What Is Investment Management?

Investment management refers to the process of managing financial assets and other investments. It can include any of the following:

  • Coming up with an investment strategy for the buying and selling of portfolio holdings.
  • Managing investments to align with clients’ goals and risk tolerance.
  • Budgeting, banking and tax services.

Simply put, investment management is the practice of managing assets within an investment portfolio to achieve a specific goal. The term is also referred to as portfolio management, money management or wealth management.

Investment management services include asset allocation, stock selection, portfolio management and overseeing existing investments. Based on a client’s objectives, a manager may choose investments between the four primary types: growth, income, growth and income, and capital preservation. But investment management isn’t just about monitoring clients’ portfolios; it may also include financial planning and advisory services.

What Does an Investment Manager Do?

Investment managers are typically charged with managing the investments of a company or an individual. Managing the assets usually means that the investment manager selects what to invest in and decides when to invest or withdraw money. They often deal with a wide range of securities and financial assets. These can include stocks, bonds, commodities and real estate.

Investing for Everyone

The job of an investment manager is to grow wealth for both individuals or companies. They do this by devising an investment strategy to meet the clients’ goals. Then they use that strategy to decide the type of investments to add to their portfolio.

While there isn’t a specific “investment management degree,” most investment managers earn degrees in finance and/or economics and then go on to get additional certifications, such as the well-regarded Certified Financial Planner™ designation. 

How Investment Management Works

Investment management firms typically manage your portfolio on your behalf. An investment manager will first assess your goals and risk tolerance by asking you a couple of questions. Based on the answers you provide and factors, such as time frame and returns, they’ll then come up with an investing strategy to match your needs.

When To Hire an Investment Manager

If you feel that your portfolio is getting too much for you to manage on your own, it may be time to hire an investment manager. They can help you make more informed investing decisions. Even if you’re feeling good and things are going well, hiring a professional only makes sense as part of a long-term investment strategy.

Several other things can tell you it’s time to hire an investment manager. Here are a few examples.

You Don’t Have Time to Monitor Your Investments

One of the main reasons people hire an investment manager is because they don’t have time to monitor their own investments. An investment manager can spend more time watching the markets and reviewing potential opportunities than you could afford to do on your own.

Investing for Everyone

You’re Not Confident About Making Investing Decisions on Your Own

Though countless resources are available on the internet to help you make sound investing decisions, it can still be challenging to know if your current investments will continue to be profitable. An investment manager may also help you avoid making any mistakes in the stock market that could cost you money in the long term.

You Have a Very Large Amount of Money You Need To Invest

Investing all of your money on your own can take a lot more time than you may have during the day. Even if you have a great deal of experience in this area, it may be difficult to monitor your investment portfolio. An investment manager can help ensure that your investments are appropriately allocated. This can help you avoid fees and increase the amount saved for retirement or other long-term plans.

You Want Someone To Help Manage Other Financial Needs

If you need help in managing your other financial needs in addition to portfolio management, you may want to consider hiring an investment manager. Such needs can include financial planning, debt management, retirement planning, insurance and more.

3 Types of Investment Management Services

Whether you’re looking for investment management services or someone to help you get your finances in order, there’s a service for you. Here are three types of investment management services to consider.

1. Robo-Advisor

A robo-advisor is an online, automated service. It will provide the ideal investment mix of securities based on your current financial situation, investment goals and risk tolerance. Robo-advisors are less expensive than traditional investment managers. They also have low account minimums, making them suitable for new investors.

Investing for Everyone

Good To Know

Robo-advisors typically charge annual management fees of 0.25% to 0.50% of your assets under management, though some charge a fixed monthly fee instead.

2. Online Financial Planning Services

Your money management may grow more complex as your net worth increases, which means you may need financial planning. Online financial planning services provide guidance beyond investment management. This can include retirement planning, estate planning, choosing a life insurance policy and more. Such services offer access to a team of both online and human financial advisors.

3. Traditional Financial Advisors

Traditional financial advisors offer investment management in addition to financial planning. These professionals meet with you face-to-face to discuss your current financial situation and goals, then advise accordingly.

You can hire a traditional financial advisor to come up with a financial plan that meets your goals. The cost of a financial advisor varies, but the charge is typically based on assets under management.

Do Investment Managers Make a Lot of Money?

Generally speaking, investment managers earn fees based on their assets under management. The more assets they can manage, the more money they can make.

An investment manager earning a 1.5% fee on assets, for example, will earn $150,000 if they have $10 million under management. If they had $50 million under management, they would earn $750,000. So the simple answer is yes, most investment managers earn a lot of money. The primary exceptions would be new managers just starting out and unsuccessful ones that can’t attract a lot of clients.

Investing for Everyone

Final Take

Investment management can help you with everything from finding the right asset allocation to picking the right stocks to building a successful retirement plan. However, you’ll likely have to pay for that privilege. In many cases, the fee will more than outweigh the benefit you receive, but this is a determination that each individual investor must make on their own. 


Here are the answers to some of the most frequently asked questions regarding investment managers.
  • What are the four types of investments?
    • The four primary investment types are growth, income, growth and income, and capital preservation.
  • What is an investment management degree?
    • Most investment managers earn a finance or economics degree as there is no specific investment management degree. From there, they usually go on to get certifications like the Certified Financial Planner™ designation.

John Csiszar contributed to the reporting for this article.

Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.


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