What is Asset Management? Industry Overview and Career Options - YouTube

what's up everyone kenji here and in this video i  thought i'd explain the asset management industry  

so firstly we'll look at the definition  of the asset management industry  

which is also known as investment management then  we'll look over the types of asset classes there  

are next we'll go over the career options  in asset management looking at things like  

the work hours the skills required as well as  the compensation and lastly we'll go over the  

types of companies there are out there in asset  management in case you're looking to apply to some  

so looking at a basic definition asset management  is about managing clients as money with the goal  

of growing that money so generating returns over  time while at the same time mitigating risks  

as for how they get compensated for this it's  usually a fixed fee that's a percentage of the  

assets under management so basically if a fund  has a hundred million dollars under management  

one percent of that so one million in this  case will be their annual fixed fee some funds  

also have a variable variable aspect which is  basically based on performance right so if they  

hit a certain target they're going to get a say  variable of that which is basically like a bonus  

as for who the clients of asset managers  are so essentially who's investing the money  

it's usually large institutions and at  the same time high net worth individuals  

so when it comes to institutional investors  these are the likes of pension funds  

sovereign funds or insurance companies all of  which have one thing in common and it's that  

they usually have a lot of cash they need to do  something with so instead of just leaving it in  

their bank say they decide to invest it through an  asset manager to illustrate let's suppose you have  

a car and every month you pay insurance for that  car in case you crash now the insurance company is  

getting this cash every month and he wants to grow  it so that if you ever actually end up crashing  

they can pay for that and that's why they need  asset management companies to help them grow that  

money now the second type of client has to do with  high net worth individuals so these are extremely  

well-off people like say something like 10 million  plus in net worth and they're also looking to  

invest their money just because they want to grow  it right now if a regular person like say myself  

goes in there and tries to ask for these services  they're just going to reject me mainly because i  

don't have enough money for it to be worth their  time and at this point you might be wondering well  

what's the difference between asset management  and wealth management then and truthfully they're  

relatively similar the main difference is that  wealth management not only encompasses getting  

good returns on the money but also other things  like working out your retirement plans working out  

your mortgage your taxes and so on so it does  focus on more aspects of your financial life  

as opposed to just getting better returns free all  right so once an asset management company has all  

the money from their clients where do they invest  it enter the different asset classes and broadly  

speaking there's around four main ones stocks  bonds commodities and alternative investments  

when it comes to stocks it ranges from blue chip  companies which are the biggest in the world  

think of apple google amazon and so on to small  cap companies so smaller in size all the way to  

gross stocks like those from emerging countries  say secondly we have bonds and these can range  

from corporate bonds so those issued by companies  like for example apple issued 14 billion worth of  

bonds and on the other hand they can be government  bonds so for instance in the us the u.s government  

bonds would be one but they can also be issued  by a specific state or a specific city as well  

now thirdly we have commodities and these  are essentially raw materials that are very  

popular so for instance it could be gold it  could be silver could be oil coffee and so  

on the list is actually quite long here and  then lastly there's alternative investments  

and these are the likes of hedge funds venture  capital private equity and so on if you want  

to go all the way to the extremes even artwork  is sold as an alternative investment as well  

when it comes to careers in the asset management  industry broadly speaking there's three main  

categories the first one has to do with the  investment team and within it there's actually  

around three different roles the first one has to  do with the portfolio manager then you have the  

research analyst and you also have a trader so  a portfolio manager is essentially the decision  

maker so he he or she is in charge of making  sure you hit the right return targets and the  

right risk metrics secondly you have the research  analyst and this is a person that's in charge of  

generating the ideas coming up with different  ideas and seeing what's going on in the market  

and once they have the ideas they're going  to pitch them to the portfolio manager  

who's going to be there the person above  them and then lastly you have a trader  

and a trader is essentially executing the trades  on behalf of the portfolio manager's wishes  

it's not so common to be generating your own ideas  as a trader now because these asset management  

companies are so large and they have offices  all around the world usually an investment  

team ends up specializing in a particular region  and in a particular asset class so for example it  

could be a team specialized on on us government  bonds it could be another team specialized on  

german blue chip stocks for instance the next big  category i'd call client oriented so these are  

the likes of sales people relationship managers fm  managers and so on and their primary goal here is  

to attract new people so attract new investors to  come and invest in this asset management company  

and at the same time keeping the ones that  are currently there happy so if they ever have  

any questions or anything like that it's them that  they would attend to and the last big category you  

have here is a support team and in short these  are making sure that the other two categories  

are able to do their work smoothly so think of  the legal team think of hr compliance and so on  

now out of these three the investment team is  definitely the most prestigious but all three  

of them are essential right if one of them were  to disappear the other two would just not be able  

to do their job well now when it comes to the  work hours asset management is not like investor  

banking or management consulting where you can  be in there for 16 hour days so 80 hours a week  

80 hours a week right it's typically for the  investment team which is usually the one that  

works the most it's around 12 hours a day so 60  hours a week when it comes to the client oriented  

side so the sales team for instance i'd say around  50 hours a week is normal and lastly when it comes  

to the support side i'd say around 40 to 45 hours  a week is what you should expect when it comes to  

salaries in a big u.s city like what might be new  york or san francisco those in the investment team  

can be earning anywhere from seventy to eighty  thousand dollars and that could increase to around  

six figures with the bonus when it comes to the  sales side it's obviously going to be less and  

the same goes for the support side but you also  gotta keep in mind that these sides are working  

less hours too lastly looking at the skills  required for the investment side spreadsheets  

are probably going to be your best friend  alongside research and good analytical skills  

secondly for the client oriented side as you can  probably imagine it's more about communication  

interpersonal skills and a good ability to sell  for the support functions i'm not really gonna  

list out the different skills mainly because  someone that works on the tech side of support  

versus the legal side of support is obviously  going to have very different kind of skill sets  

when it comes to types of companies there's  actually a split between those that are pure play  

and those that are divisions within an investment  and what i mean by pure play is that it's their  

core business model to do asset management and  these are the likes of say fidelity vanguard  

or blackrock are among the biggest ones and they  typically have assets under management well above  

the one trillion dollar mark that's right one  trillion so that's a one followed by 12 zeros  

on the other hand there's the asset management  division within an investment bank so investments  

actually have a lot of different client-facing  divisions like what might be investment sales and  

trading research and obviously asset management  and it is an important part of their business but  

it's not their only part that's why they're  not regarded as pure play asset managers  

now some examples of the big investments out  there include jp morgan goldman sachs and ubs  

all of which have a big asset management side as  well so that's an overview of the asset management  

industry i am considering making a similar video  to do with private equity if this one does well  

so make sure you hit that like and subscribe  and let me know in the comments if you'd be  

interested in that that's all for this one  and i'll hopefully catch you in the next

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