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Marketing to Asset Managers in Investment Banking

Understanding Their Role

Investing money can be a challenging and confusing activity for an individual or an organization. There are many types of investment options (stocks, bonds, real estate, currencies…), and there are many variables to consider such as taxes and estate planning. Most individuals and organizations don’t have the time or the expertise to thoroughly research which investment options would be best for them. For this reason, investment banks have “asset management” departments- their role is to collect money from individuals and organizations and invest this money for them.


Asset management refers to the professional management of investment funds for individuals, families, and institutions. Investments include stocks, bonds, convertibles, as well as alternative assets such as hedge funds, private equity funds, and real estate).1 Asset management is a huge business, with investment banks handling trillions of dollars for their clients. Since these banks receive fees in exchange for investment services, asset management is a major source of revenue for these firms. The services offered by asset management departments are diverse, and vary based on the size of an investor’s portfolio and the level of assistance the investor requires.


A mutual fund is a type of professionally managed investment that pools money from many investors to purchase securities. Investors participate in mutual funds by purchasing “shares” of the fund. This makes every investor a part-owner of the mutual fund, just like purchasing a share of stock makes an investor a part-owner of a company. Mutual funds have clear investment objectives. Some may focus on long-term stable growth, while others may seek higher short-term returns (which may be risky). There are also funds that allow investors to invest in an entire “sector”. For example, some specialty funds invest only in healthcare or automotive stocks. The money in the mutual fund is invested by the Fund Manager, who buys and sells securities in accordance with the fund’s investment objectives.


Another example of asset management is the pension fund. Some companies offer a pension for their employees, which is a guaranteed income stream after retirement. Since this represents a major future expense for the employer, they must set aside money now in preparation. Rather than letting the saved money sit idle, pension fund managers invest the saved funds on behalf of the employer. These investments tend to be very safe and conservative to ensure that funds are available in the future to make the obligated pension payments. There is a huge amount of money invested in pension funds- it is estimated that the total value of these funds worldwide is around $20 trillion.


Fund performance is a key metric when evaluating asset management capabilities. Investors measure this by relying on different performance measurement firms, such as Morningstar and Lipper, which compile aggregate industry data demonstrating how individual funds perform against both indices and peer groups over time.2


“Wealth management” refers to advisers who provide investment advice to select individuals, families, and institutional clients. Wealth management advisors attempt to identify investors who have a significant amount of funds to invest, and then work with them on their investments. An investment bank’s wealth management advisors help investors define their risk tolerance and diversification preferences. They then assist investors in self-directed investments, or make investments on their behalf. Wealth management advisors typically limit their services to clients that have more than $5 million in investable funds.3


Some banks have also created a "private client services" business that brings many, but not all, of the services described earlier to investors who do not meet the investable fund threshold required to be covered by wealth management advisors. Individual investors that have an even lower amount of investable funds are covered by "retail" advisors and brokers who help them invest cash in both the asset management products offered by the bank and products offered from external sources.4

“…asset management will become the single-largest segment of financial services, as users of capital become providers of capital in newly developed economies and an aging global demographic creates an inevitable shift from consumers to savers…. The new ‘investor class’ will not be happy to do their investing electronically – they will ‘value human relationships with financial advisors’.”

- Morgan Stanley CEO James Gorman5

1 Stowell, David. Investment Banks, Hedge Funds, and Private Equity. 2nd ed. 225 Wyman Street, Waltham, MA 02451, USA The Boulevard, Langford Lane, Kidlington, Oxford, OX5 1 GB, UK: Academic Press, 2012.

2 Ibid

3 Ibid

4 Ibid

5 Butcher, Sarah. “Morning Coffee: Careers in finance that will still be hot in 2030. Citigroup investment bankers take control at Barclays.” eFinancialCareers. July 2014. Accessed 11/24/15, available at: news.efinancialcareers.com/uk-en/177728/morning-coffee-careers-finance-will-still-hot-2030-citigroup-ma-bankers-take-control-barclays


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Copyright © 2016 Fusion Point Research, Inc.

Investment Banks help corporations, pension funds, investment groups and wealthy individuals manage their assets. Investment Banks determine their clients’ goals, and then use their vast expertise in financial markets to assist clients in achieving these goals.