Investment management and wealth management, as two major business lines in the financial industry, have some overlaps but also differ in many aspects. Getting a clear understanding of their differences can help investors better utilize available services and products. The core distinctions lie in their business focus and service scope.
Investment management focuses on assets growth through professional investing
Investment management companies serve as professional investors, with the core business of investing client capital based on stated investment mandates. Portfolio managers utilize expertise to construct portfolios and generate returns. The priority is growing assets under management. Products offered are investment strategies tailored to client risk profiles.
Wealth management provides more holistic advisory services beyond investing
Wealth management firms focus more on overall client relationships rather than just investments. The scope covers investment products, customized solutions and financial planning for high net worth individuals. Wealth managers act as advisors and the priority is retaining client relationships by satisfying needs beyond investments.
Investment managers have a broader client base while wealth managers target HNWIs
Investment managers serve a wide spectrum of clients like retail investors, institutions, pension funds and endowments. Wealth managers mainly focus on high net worth and ultra high net worth individuals who require more personalized services.
Investment managers offer strategies while wealth managers offer solutions and planning
Investment managers construct specific investment strategies based on philosophy and process. Strategies come in various forms like mutual funds, ETFs, separate accounts. Wealth managers offer more customized holistic solutions and planning services based on in-depth client profiling.
Investment performance is key for investment managers while relationships are key for wealth managers
Investment managers emphasize investment performance as that is their value proposition. Wealth managers focus on maintaining long-term client relationships by providing satisfactory services spanning investments, tax, trusts, estate planning based on their unique needs.
In summary, investment management focuses on investment performance while wealth management provides more holistic customized services. The former targets a broader base while the latter caters to HNWIs specifically. Their product offerings and value propositions differ based on business priorities.