A career as a financial advisor is highly attractive as it pays well and allows professionals to directly impact others’ lives. Namely, financial advisors help clients achieve their financial goals. With a median salary of $99,580, this role is financially lucrative. However, aspiring financial advisors should know that it’s difficult to enter the financial services industry without an in-depth understanding of asset management.
Specialized programs, like St. Cloud State University’s online Master of Business Administration (MBA) with a concentration in Finance, help young professionals master asset management and other core concepts necessary to excel in a career in financial management. An MBA provides dividends throughout a professional’s career, signaling their expertise to both prospective employers and clients. With that in mind, this article explores how financial advisors use asset management to maximize client wealth.
What Is Asset Management?
Asset management is the practice of buying and selling investments to increase wealth over time. This task is a critical part of financial advising as it helps clients reach their financial goals. During this process, advisors also help their clients understand the difference between assets (items of value) and liabilities (debts to be paid). That said, helping clients meet their financial goals through asset management is usually easier said than done.
Assets like stocks, bonds and gold all generate different returns and come with varying levels of risk. Financial advisors must balance the risk and returns of different assets while also considering factors like the following:
- Time horizon: The length of time that a client plans to keep money invested
- Risk tolerance: The level of risk that a client is comfortable taking
- Financial goals: The milestones that a client wants to achieve in the future (buying a home, sending kids to college, for example)
For the most part, financial advisors cannot take a one-size-fits-all approach to asset management. Instead, they must tailor their asset management strategy to fit different clients’ needs. For example, a high-earning young professional would likely want to invest their money more aggressively than someone who is nearing retirement.
Asset Management Career Paths
Terms like “financial planner” or “asset manager” are often used interchangeably. While these professionals have significant responsibility overlap, they technically offer different services. Per WealthNation, there are four different types of asset managers:
- Registered investment advisor (RIA): These professionals have a fiduciary responsibility to act in their client’s best interests. They offer services like investment planning, retirement planning or tax planning.
- Financial advisor: These professionals may or may not have a fiduciary responsibility to their clients. They offer services like investing, budgeting, saving, tax planning, estate planning, retirement planning, insurance planning and more.
- Financial planner: Financial planners are similar to advisors. However, while planners offer extensive financial advice to clients, they do not always act on behalf of their clients. Financial planners typically help clients in areas like investing, retirement, estate planning and more.
- Investment broker: These professionals serve as intermediaries between a client and investment products, helping facilitate the purchase or sale of assets.
It’s also important to note that there is also a distinction between an asset manager and a wealth manager. An asset manager is responsible for managing an investment portfolio on behalf of a client(s). A wealth manager offers a more comprehensive service that covers areas such as estate planning, saving for college, retirement and investing. Understanding the subtle differences in these roles is critical for rising graduates interested in entering this industry, to avoid choosing the wrong career.
The Path to Becoming a Financial Professional
Regardless of the career path that professionals ultimately choose, obtaining a Master of Business Administration is one of the best ways to pursue a successful career. The financial services industry relies heavily on individuals with certifications, and earning an MBA with a concentration in finance is the first step to standing out among peers in the field.
St. Cloud State University’s online MBA with a concentration in Finance provides graduates with a broad-based background in business essentials while also diving into the complexities of asset management and financial advising. This program offers detailed financial courses like Investments and Security Analysis and Financial Management — both of which prepare graduates for a wide range of advisory roles.
Learn more about St. Cloud State University’s online Master of Business Administration (MBA) with a concentration in Finance program.
