Managing your company assets is more than just looking over your current expenses and comparing them to incoming profit. It involves a thorough investigation into how the money you invest is being used, where you can invest safely, and when the best time is to spend at-risk capital. In addition, it also involves considering the assets you currently have, such as real estate.
Asset management companies are in existence to perform a complete company investigation. These professional advisory service companies delve deep into a company's history, figure out whether certain ventures are worthwhile, and construct a safe, workable plan for expanding the client's portfolio through safe, low-risk investing.
Should You Hire An Asset Manager?
First of all, what is an asset manager? An asset manager is an expert who handles stocks, bonds, and other assets for clients. Unlike a financial advisor or stock broker, asset managers work for you--not the companies they're investing your money in.
Perhaps you already contract with an independent payroll management firm that oversees company employee benefits, retirement programs, and health insurance. Although this can be a great relief for management teams seeking to cut costs and free up time for more important duties, it does not ensure that the money you spend on overhead, equipment, maintenance, and other services is being handled in the most efficient manner.
Expanding the company portfolio means knowing how much can truly be invested, whether the money spent will be returned with a profit, and whether the investment partner is sound. An asset management consultant is a professional who knows how to perform a complete investigation of just how your company operates, why it’s making - or losing - the amount it is, and how proper investments can guarantee satisfying returns.
Choosing An Asset Manager
As a rule, the more you want to expand your company's portfolio, the more aggressive you will have to be when it comes to investing. However, you need to deeply explore your firm's financial foundation and decide whether you actually have the at-risk capital available. You may be making profit, but is this profit guaranteed for the next two or three years? Are there upcoming expenses that are going to be costly and, therefore, cannot be ignored?
Before choosing an asset manager, decide which investment strategies are appropriate for your business. For instance, if you're interested in real estate asset management, then you need to decide ahead of time how you want to invest your money and property. Some financial advisors tend to jump around the investment pond, changing their strategy constantly in order to cash in on a quick-profit scheme. Tried-and-true methods used over and over by a successful asset manager are more desirable. It is important that you consult with your prospective management partner and insist on a good look at his or her performance history.
Asset Management Fees
Fees should be consistent with the amount of money you are trusting your advisor with. Front-end fees are to be avoided at all cost. Even if your business is rather small, you should insist on fee negotiation regardless of the assets you have available.
Incentive fees are not necessarily a bad thing. The important factor is how big the additional fee is in relation to the return on investment you would enjoy. Always insist on seeing examples of these fee structures before signing off on incentive fee contracts.
