Most modern accountants fulfil a wide variety of roles related to general accounting, from investment managing to asset managing to retirement planning. With the wide variety in different roles available for any budding accountant it can be difficult to differentiate between their purposes; there’s alot of potential overlap between a retirement planner and an asset manager, for instance. In this article we will be discussing the role of an investment manager in more detail.
As a simple way of looking at it, an investment manager is a hired professional who tracks and alters an investment into a business or product, depending on the current market situation. An investment manager spends most of their time tracking a given investment into a company in order to maximise profits. Now this could be investing into a company with only a single clients money, or it could be accumulated from many sources in order to invest as a ‘mutual fund’. Mutual funds usually offer an individual a stable return on their investment, and are strictly regulated to avoid ‘bad investments’ and loss of a persons’ money. Mutual funds are usually invested into a trending stock option or future, giving a steady but low yield over time as investments mature. An investment manager will assess the nature of any investment every day, and can recognise the signs of when to ‘cash in’ on a bond or stock.
An investment manager is usually given a target to reach before their job is completed, in the form of either a total time or total return. Some potential investors have a target in mind when they approach (such as 5% gain/ year) while others already have an idea of what they would like to invest in, and simply need a ‘middle man’ for the logistics and advice. In either situation, the accountant will clearly and concisely outline the risks associated with any investment.
There is alot of overlap between the popular terms of asset management and ‘investment management’, with them both doing the same basic duties. The difference however, is the size of clients investing for. Asset managers are usually those involved with grouped ‘mutual funds’ or single, high value investments from a business or wealthy private investors. Asset managers face a slightly different set of obstacles than investment managers, with the most prominent being that their investments can usually disrupt the market slightly; an asset manager will have to account for this when investing. A simple example for this is a large asset or hedge-fund manager investing in a small business; their bulk buying of options or futures may cause the market price of shares to fall slightly in response. Conversely, the inverse for this is a common factor aswell; with fewer available options the price/value can increase. These are all factors an asset manager must consider, while an investment manager will usually not have this issue.
If the government is the investor in any situation, different rules and regulations apply to them over any private sector investments. Public body investments are a vast topic, and have built in contingencies which are optional extras to most normal asset managing, such as insurance. Government spending is, understandably, tightly regulated, however the potential returns from such an investment are staggering, and are often used to supplement taxes for other services. Being a government asset manager requires extra qualifications, and though the overlap is present, a normal asset manager cannot do the same job on behalf of the government.