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Two common misconceptions about investment management services

Here are two common misconceptions about investment management services.

These services are only for extremely high net-worth individuals

One misconception about the services offered by investment management firms is that they're only for the ultra-wealthy and that these firms require a very high minimum investment amount. Whilst these companies do often have very wealthy clients, many of them also work with people whose net worths are on par with or just slightly higher than the national average, and whose investment portfolios are relatively modest.

The reason some people still fall for this misconception is that up until a few decades ago, it was true that investment management firms worked almost exclusively with ultra-wealthy individuals. However, as information about investing became more readily available online and more investment opportunities arose, the number of less wealthy people who could begin to invest started to grow. As investment firms recognised the growing demand for investment management services (such as asset diversification and investment risk management) tailored to the needs of those with more modest net worths, they began to take on more of these clients. The firms that cater to this investor demographic will often offer more accessible, tiered pricing structures for their services and have a relatively low minimum investment threshold.

Those who use these services have almost no involvement in the investment management process

A second common misconception is that those who use these services do so in a passive way, and have virtually no involvement in the investment management process. In reality, investment management is a collaborative process between the firm's employees and the clients.

Clients of these companies must communicate regularly with employees, to review their current investment goals and clarify whether their attitude towards risk, in relation to their investments, has evolved. This communication can then allow the investment management company to help them to meet their goals and adjust the contents of their investment portfolios. Additionally, if an investment manager believes it would be wise for a client to make specific changes to their portfolio, they will need their client to examine why they have made this recommendation and then wait for the client to decide if they want to accept it before they can then proceed with making these changes.

Clients of investment management firms also need to try to keep up to date with economic developments and market trends. Whilst their investment managers will be highly knowledgeable about these matters and the effects they may have on their clients' portfolios, it is often much easier for these experts to have productive discussions with their clients about these important topics if their clients have familiarised themselves with current events. 

For more info about investment management, contact a local company.