The need for investment management arises due to:
Every individual practices investment management to some degree, including budgeting, saving, investing and spending. However, an investment manager is one who specializes in placing money in diverse instruments in order to accomplish predetermined goals. Investment managers are also widely known as fund managers. Investment managers may specialize in advisory or discretionary management. When an investment manager merely offers suggestions regarding where to invest money and when to sell securities, the practice is known as advisory investment management. When an investment manager can take action in managing portfolios without requiring client approval, it is called "discretionary" investment management.
Investment management is often used synonymously with fund management. Moreover, terms like asset management, wealth management and portfolio management are used, with a thin line differentiating them. Asset management is often used for the management of collective investments, which refers to investing money on behalf of a large group of clients in a wide range of investment options. An example of this is mutual funds. Investment management that involves managing the investments of high net worth individuals is often referred to as wealth management. Asset management and wealth management are also called portfolio management.
The process of investment management involves the following:
Setting investment objectives: Investment goals are different for individuals, financial institutions, banks, insurance companies and pension and mutual funds. For instance, the objective of a bank could be to achieve a minimum interest spread, while that for an individual investor could be to increase return on investment.