What does it mean to manage assets? What is the role of an asset manager and what is the benefit to the client company?
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They charge a small % fee for the funds that they manage. Since they manage billions (trillions?) of dollars, even a small % fee is a lot of money. They may also provide other paid services like brokering stock trades, 1-on-1 consulting, etc.
They charge a fee on assets managed… typically around 0.5 or 1% of assets annually. Manage a $1B fund, and that’s $5-10m in fees. Vanguard has $7T under management in total.
If you have some spare money you can put it in the bank, and they will pay you a small amount of money for letting them lend it out as mortgages.
Or you could buy shares in a few companies and hope those companies do well and the share prices go up. You would have to deal with brokers to help you buy the shares and sell them again when you want the money back to eg buy a house.
Or you could give the money to an asset management company, who will put it in a big pile called a fund and then do all the legwork of buying and selling shares or whatever (collectively called investing). They are professionals so you hope they will do a good job of picking companies that will make lots of profit. They also make it easy to withdraw some of your assets as cash.
Unlike a bank the asset management firm passes the risk of investing into you. If the bank uses your money to give someone a mortgage and that person defaults, you still keep all your money, and still get paid interest. If the fund manager picks a company and it goes down in value then you have lost some of your money, but equally if it does really well then you see lots of profit.
In return you pay the asset manager a small fee, generally some combination of a fixed percentage of your assets in their pile, and a small percentage of any profits they generate for you.
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