Wealth management vs assetmanagement: what’s the difference inAustralia?
To someone looking for help with their money, wealth management, asset management, financial planning and investment advice all seem like different names for the same service. What makes it harder is that, due to which titles are protected in Australia, what a business calls itself may not reflect what it does.
The short answer
| Asset management | Wealth management | |
| What it covers | Managing invested capital under a mandate | A person’s whole financial position |
| What you typically get | Investment decisions inside a fund or portfolio | Strategy across investments, super, tax, insurance and estate planning |
| Personal advice included? | Not necessarily | Depends on the provider and agreement |
| How it’s assessed | Against objectives, benchmark, risk and fees | Whether advice was appropriate, explained and responsive to your circumstances |
| Typical charge | Percentage of funds invested | Advice fees, often plus investment and platform costs |
What is asset management
Asset management involves professionally managing money invested in financial assets.
An asset manager makes investment decisions according to an agreed strategy, investment objective or mandate. This may involve:
- Selecting shares, bonds and other investments
- Deciding how much money is allocated across asset classes
- Monitoring investment risks
- Rebalancing portfolios
- Measuring performance against investment objectives or benchmarks
For example, an Australian investor might purchase units in an exchange-traded fund (ETF) that invests in international shares.
The fund’s investment manager oversees the investments according to the fund’s strategy. However, purchasing the ETF does not necessarily mean someone has assessed whether that investment suits the investor’s individual circumstances.
Asset managers serve institutional investors, superannuation funds, businesses and individuals.
Most Australians encounter asset management indirectly through managed funds, ETFs and their superannuation investment options.
How is Asset Management Performance Measured?
Investment managers are commonly assessed against factors such as portfolio returns, investment objectives, risk, benchmarks and fees.
However, investment performance and investment suitability are different questions.
A fund outperforming its benchmark does not automatically mean it was an appropriate investment for a particular person.
What is wealth management
Wealth management takes a broader approach.
Rather than concentrating exclusively on investment performance, it considers how different parts of someone’s financial position interact.
Depending on the provider, wealth management services may include:
- Investment and portfolio strategy
- Superannuation and retirement planning
- Cash flow and debt management
- Personal insurance and wealth protection
- Tax-effective financial strategies
- Estate planning coordination
- Planning for business ownership or significant financial transitions
Consider someone approaching retirement who owns an investment property, holds substantial superannuation savings and wants to support their children financially. Their decisions involve more than selecting investments.
They may need to consider retirement income, debt, taxation, investment risk and estate arrangements together.
A wealth management service offering comprehensive personal advice may help coordinate these decisions. Specialist tax or legal advice may still be required.
Does a Wealth Manager Also Manage Investments?
A wealth management business may provide investment advice, manage portfolios or recommend investment products managed by other organisations.
Some financial groups operate both advice businesses and investment management businesses.
This arrangement is often called vertical integration and can create potential conflicts when a business benefits financially from recommending products associated with its wider corporate group.
Australia’s Financial Services Royal Commission examined conflicts involving vertically integrated financial businesses.
This does not mean every integrated business provides inappropriate advice. However, consumers should understand who owns the advisory firm and whether it receives benefits from recommended investments.
Wealth Manager vs Financial Adviser: Is There a Difference?
In Australia, “wealth manager” is not a legally protected title, so it doesn’t guarantee comprehensive personal financial advice.
By contrast, “financial adviser” and “financial planner” are legally restricted titles. Consumers can check an adviser’s authorisation through ASIC’s Financial Advisers Register.
Which service do you need?
Asset management may be sufficient if:
- You already understand your financial objectives.
- You want professionally managed investment exposure.
- You are comfortable making your own financial planning decisions.
- Your main concern is investment selection and performance.
Personal financial advice within a wealth management service may be more appropriate if:
- You are preparing for retirement.
- Your investments, debts and superannuation need to work together.
- You have significant assets or complicated financial arrangements.
- You are managing an inheritance or selling a business.
- Your financial decisions affect dependants or multiple generations.
You may not need comprehensive advice for a single financial question. Limited or one-off personal advice could be suitable instead.
The Bottom Line
Asset management concentrates on how money is invested. Wealth management considers how financial decisions fit together.
Neither term tells you exactly what advice is included, whether it is personalised or what it will cost.
Before engaging any provider, clarify the service being offered and how it relates to your needs.
Disclaimer
Vitti Capital Pty Ltd (ABN 13 670 030 145) is a Corporate Authorised Representative (001306367) of Point Capital Group Pty Ltd (ABN 41 625 931 900), the holder of Australian Financial Services Licence number 518031. This communication contains general information only and does not take into account your objectives, financial situation, or needs. Before acting on any information, you should consider whether it is appropriate to your circumstances. We recommend you seek personal financial advice before making any investment decision.
If you have not previously received a copy of our Financial Services Guide (FSG), it is available free of charge by contacting us or via https://vitti.capital/fsg/
Past returns do not always indicate future returns and there is always a risk of loss when trading and investing. Our Privacy Policy is available at https://vitti.capital/privacy-policy-2
