Investopedia/James Chen: What is a Money Manager?

Investopedia
Investing Asset Allocation
Money Manager
Reviewed by James Chen
Updated Jan 2, 2018
What is a Money Manager

A money manager is a person or financial firm that manages the securities portfolio of an individual or institutional investor. Typically, a money manager employs people with various expertise ranging from research and selection of investment options to monitoring the assets and deciding when to sell them.

In return for a fee, the money manager has the fiduciary duty to choose and manage investments prudently for his or her clients, including developing an appropriate investment strategy, and buying and selling securities to meet those goals. A money manager may also be known as a "portfolio manager" or "investment manager." Examples of leading money managers include Vanguard Group Inc., Pacific Investment Management Co. (PIMCO) and J.P. Morgan Asset Management.
BREAKING DOWN Money Manager

Money managers provide their clients with personalized service, an individualized portfolio and ongoing management. With fee-based management, as opposed to transaction-based management, the client and his or her advisor are on the same side, which means clients no longer have to question the decisions of a broker to buy or sell their securities. A professional money manager does not receive commissions on transactions and is paid based on a percentage of assets under management. Thus, it is in the best interest of both the money manager and client to see the portfolio grow.
Reasons to Use a Money Manager

    Expertise: A professionally trained money manager has the expertise to select the most appropriate investments for his or her client’s portfolio. Money managers typically hold a Chartered Financial Analyst (CFA) designation that helps them assess a company’s fundamentals by analyzing its financial statements. A money manager may also have expertise in a specific sector. For example, the manager may have previously held roles in the automotive industry that provides an edge when selecting auto stocks.
    Resources: Money managers have access to a plethora of information and tools such as interviews with company executives, research reports, analytics data and advanced financial modeling software. Having these resources allows money managers to make investment decisions that have a higher probability of success. For instance, a money manager might discover that a company has a unique competitive advantage after interviewing its CEO. (For more, see: Signs You Need a Money Manager Now.

Money Manager Fees

Money managers typically charge management fees ranging from 0.5% to 2% per annum, depending on the portfolio size. For example, an asset management firm may charge a 1% management fee on a $1 million portfolio. In dollar terms, this equals a $10,000 management fee. ($1,000,000 x 1 / 100). Asset managers and hedge funds may also charge a performance fee, which is remuneration for generating positive returns. Performance fees typically range between 10% and 20% of the fund’s profit. For instance, if the fund charges a 10% performance fee and returns $250,000 profit, the client pays an additional $25,000 in fees ($250,000 x 10 / 100).
Compare Popular Online Brokers
Related Terms
Daily Money Manager - DMM
A daily money manager is a person who takes over someone’s day-to-day financial tasks.
more
Chartered Portfolio Manager - CPM
Chartered portfolio manager is a professional designation offered by the Global Academy of Finance and Management (GAFM), formerly the American Academy of Financial Management.
more
Prudent Investment
A prudent investment refers to the use of financial assets that are suitable for an investor’s goals and objectives.
more
Active Investing
Active investing refers to an investment strategy that involves ongoing buying and selling activity by the investor.
more
Portfolio Management
Portfolio Management involves deciding investment mix and policy, matching investments to goals, asset allocation and balancing risk with performance.
more
Portfolio Manager
A portfolio manager is responsible for investing a fund's assets, implementing its investment strategy and managing the day-to-day portfolio trading.
more
Related Articles

Asset Allocation
The Evolution Of Money Management

Asset Allocation
Passive vs. Active Portfolio Management: What's the Difference?

Asset Allocation
5 Ways to Rate Your Portfolio Manager

Asset Allocation
Where Does Bill Gates Keep His Money?

Asset Allocation
Understand Your Role In The Investing Process

Asset Allocation
Portfolio Management Tips for Young Investors

    About Us
    Advertise
    Contact
    Privacy Policy
    Terms of Use
    Careers

Investopedia is part of the Dotdash publishing family.

    The Balance
    Lifewire
    TripSavvy
    The Spruce
    and more