There are many different descriptions within the financial services industry for financial management companies, including asset management, wealth management, and family office services. So when choosing an advisor, it’s key to understand the differences between these terms and the capabilities that different types of managers offer.
Asset management is pure investment management, such as buying mutual funds (with decisions overseen by a mutual fund manager). For example, hedge funds are also just asset (e.g., investment) management.
Robo-advisors are firms that automate investment management by using computer algorithms to build and manage portfolios. Therefore, they are typically asset managers without a lot of additional services. When investors’ financial situations are more complex, they will need more of the services a wealth management firm provides.
The industry has evolved and there are now wealth management firms because investment returns, over time, are impacted by more than just the investment solution.