Nadine Terman is a Founder and financial advisor at Solstein Capital in California. In the following article, Nadine Terman provides the details of investment management, also called wealth management, portfolio management, or money management
Participating in the stock market, whether through investing or trading, can be profitable, but the strategies, processes and requirements are very different. Investors and traders both monitor security price moves, assess key market data, and research companies, factors and exposures. While investors typically have a longer-term view of the market, traders often use technical signals to buy, sell, short and cover on a more frequent basis.
Nadine Terman on Asset Management
Put simply, Nadine Terman and the team at Solstein Capital explain that investment management refers to the holistic management of financial assets and liabilities. It is not just about trading securities, but rather their selection, evaluation, and execution within the context of an overall portfolio and a client’s objectives. The team must take into account the client’s investment horizon. risk mandate, return objectives, and liquidity needs, among other key factors. Additionally, the team will consider tax and estate planning considerations when executing an investment strategy.
Types of Investment Management
Nadine Terman of Solstein Capital shares that not everyone wants (or needs) to hire a professional investment manager. Individuals who choose to invest on their own, though, are well advised to research their potential investments as well as understand how they fit into their near- and long-term plans. Oftentimes individual investors may find it prudent to seek the advice of financial advisors and/or tax professionals who can counsel them on what tax optimization strategies (if any) are available to them.
Nadine Terman of Solstein Capital explains that given the highly dynamic global economy, market and regulatory environments, investors often find it beneficial—and cost effective—to hire professional investment managers, whose job it is to monitor and stay abreast of the investment, macroeconomic and regulatory landscape—as well as their individual needs and objectives. According to a Willis Towers Watson report, 20 of the leading investment management firms are responsible for $59 trillion worth of assets, having increased by 13% in the past year; thus, many individuals and institutions work with professional investment managers.
The Role of an Investment Firm
Nadine Terman of Solstein Capital explains that there are various benefits to working with a skilled professional investment manager. The manager may be experienced in constructing a portfolio across assets, including equities, bonds, real estate, and commodities which can form part of a diversified portfolio. Additionally, professionals often have the analytical tools and human resources to implement risk management strategies in the client portfolio.
Firms that manage assets worth over $100 million are required to register with the Securities and Exchange Commission (SEC), and must also accept certain additional financial responsibilities as stewards of client assets. Registered managers must act as fiduciaries charged with acting in their clients’ best financial interest.
Portfolios that have not only liquid assets, such as stocks and bonds, but also illiquid assets such as real estate or private equity have an additional layer of complexity for the manager. Real estate assets, which are oftentimes organized as Real Estate Investment Trusts (REITs) must comply with strict tax and regulatory requirements. These investments have specific reporting and tax requirements, about which the individual (or professional manager) must keep abreast. When selecting a professional investment manager to manage a portfolio of public and private assets, such as REITs, it is important to select an advisor that has extensive experience successfully managing similar portfolios through various market and economic cycles.
Final thoughts
Managing a portfolio of investments is not a simple, cookie-cutter, exercise. Those choosing to manage their portfolios themselves do so with the understanding that it entails a high degree of research, discipline, planning and expertise. Those choosing to hire an investment manager must take care to select a manager that has the expertise, experience, and resources to steward the client’s portfolio through various economic and market environments.
