Investment Management: Services, Advantages and Disadvantages

Investment Management: Services, Advantages and Disadvantages

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Jaya Sharma
Assistant Manager - Content
Updated on Dec 20, 2022 10:04 IST

Investment management is a process of managing and increasing your funds for your future financial requirements. This is achieved through several investing services such as tax and retirement planning.


In this article, we will be discussing the details of investment management, its working and services offered.

Table of Contents

What is Investment Management?

It is a process of handling financial assets and other investments that involves devising strategies for acquiring and disposing of portfolio holdings. Budgeting, banking, tax services, and duties are part of investment management. It is also known as portfolio management, money management, or wealth management. The aim is to meet the investment goals of the clients through retirement plans, insurance plans, pension funds, etc. 

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How Does Investment Management Work?

It involves handling of the investment portfolio to suit your financial plans and requirements. This starts with signing a consulting agreement with an expert. These professionals understand and assess the requirement of your financial portfolio investments. Accordingly, they develop a detailed strategy for investing and multiplying funds over time. Experts invest in various securities, real estate, alternate assets, and pooled assets. They discuss the strategies, costs, terms and conditions with the client. Once the approval process is completed, investment managers manage the client’s investment portfolio on a regular basis with periodic reviews and discussions. 

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Services offered through Investment Management

The following services are useful for thoroughly managing your investments:

  • Asset allocation: Asset allocation refers to the division of investments among various assets such as bonds, stocks, and cash. It is an investment strategy that balances risk and rewards by appropriating the portfolio’s assets. This is per an individual’s goals, investment horizon, and risk tolerance.  
  • Financial statement analysis: Another important service in investment management is the purpose of decision-making. It helps in evaluating financial performance and business value. Experts use horizontal, vertical, and ratio analysis for financial statement analysis.
  • Stock selection: This is the process where investors use a systematic form of analysis to conclude a specific stock that is worth the investment. This is a part of active management, where the position can be either short or long, depending on the investor’s perspective on stock’s price.
  • Monitoring of existing investments: Another objective of investment management is monitoring investments. The aim is to check whether you are getting expected returns. It is important to check how well each fund is performing from time to time. 
  • Financial planning: It is an important part of investment management. This helps in increasing the corpus of funds through different strategies. Wealth managers build a financial plan after a thorough analysis of your portfolio, income, assets and estates. Based on your financial requirements, they devise strategies to help you achieve long-term objectives. Financial planning aims at achieving short-term as well as long-term financial goals.

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  • Advising services: These are suggestions on investment options. Experts provide financial advice on individual securities trading, holistic asset management and investment by individual investors. Comprehensive advisory services are provided as per fiduciary standards. As per this standard, due diligence needs to be conducted for ensuring investments.
  • Tax planning: It is a part of wealth management that prevents your income from being burdened by unnecessary tax liabilities. Investment management ensures that you are able to ethically and legally lower your payable taxes. For this, investment professionals utilize tax breaks, classifications and strategies that comply wih tax code.
  • Retirement Planning: Another crucial aspect to be considered while managing your investments is planning for your retirement. A wealth manager analyzes your financial status and future objectives to plan investment strategies for your retirement. This type of investment is done in a manner to keep the risk at a minimum and is more focused on long-term investments. 

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Benefits of Investment Management

Investment management is the practice of handling assets to achieve specific investing goals. Investors, fund managers and asset managers are the professionals who perform asset management. The following are the benefits of investment management:

  1. Expert investment decisions help in better management of your funds which leads to the compounding of your money. 
  2. Risk is mitigated since fund managers plan their portfolio to diversify investments and hence reduce the risk of extreme losses. 
  3. Investments are made based on your expectations for the future. 
  4. Investment management allows you to assess tradeoffs and make decisions that facilitate your investments.

Limitations of Investment Management

While investment management is a powerful tool for compounding your funds, it does come with certain uncertainties. Funds are managed through the investment of your money via traditional and modern means. 

This means some of the investments are prone to risk elements such as the market going down or certain securities facing unexpected losses. After the management of your funds, you lack instant access to funds which is a disadvantage. Due to these limitations, expert investment advisors, fund managers and wealth managers should manage investments.  

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Investment management is both prevention and planning. While it prevents your funds from being used in wasteful spending habits, it ensures that your funds are managed for the future. For businesses, it helps in allocating funds to business processes that are helpful in achieving organizational goals. Any entity that cares about how its funds are being utilized requires management of your investments. With proper investment strategies, one can expect high returns on investment, a corpus for emergency purposes, and a regular source of income. 

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About the Author
Jaya Sharma
Assistant Manager - Content

Jaya is a writer with an experience of over 5 years in content creation and marketing. Her writing style is versatile since she likes to write as per the requirement of the domain. She has worked on Technology, Fina... Read Full Bio