Two people reviewing financial planning
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What is an Investment Manager? 

Navigating the ever-changing financial landscape can be complicated and confusing. Most people want to invest and plan for their future, but they don’t know how. From understanding stocks and bonds to retirement accounts, it can quickly become overwhelming for the average person. 

According to the Investment Advisor Association’s 2024 report, demand for investment management services has continued to grow, with the number of clients reaching 56.7 million in 2023, a record high. 

Many people end up with various investment accounts–a couple of 401ks from previous jobs, an IRA, or perhaps some stocks purchased after a few too many convincing financial influencer videos. Or maybe you’ve been investing for years and are unsure how to meet your financial goals ultimately. Either way, investment management can help guide you.

Key Takeaways

  • Investment managers manage a client’s investments and assets on their behalf.
  • An experienced investment manager will know how to diversify a client’s assets, and how to navigate challenging financial situations.
  • While there are inherent risks associated with trusting a third party with your investments, qualified investment managers are well-equipped to mitigate these risks.
  • While it is possible to manage your investments, many people find employing a manager saves them time, energy, and money in the long run.

What is Investment Management

Investment management is the handling of an investment portfolio, which is a set of financial assets that can include stocks, bonds, cash and other alternative portfolio investments. It generally involves creating both short and long-term investment strategies, buying and selling assets, asset allocation, developing a tax strategy and more. 

If these tasks seem daunting, hiring a professional investment manager could be the right choice for you. Investment managers conduct in-depth research and analysis on investment tools and market trends, leveraging years of expertise to inform their strategies. 

The terms “portfolio” and “asset management” are often mentioned in the same conversations, but these options are more narrowly focused while investment management takes a more holistic approach. Investment managers not only manage portfolios, but also assist in creating investment goals, determining an individual’s risk tolerance and conducting ongoing portfolio management, asset allocation and portfolio rebalancing. 

Benefits of Investment Management

Investment management can be helpful in several ways depending on your individual goals, including growing your wealth, strengthening your portfolio and reducing your tax burden.

Wealth Growth and Preservation

Wealth growth is accomplished using financial strategies to grow your net worth over time, and wealth preservation is about keeping the assets you already have safe. There are key strategies for both growth and preservation, and investment management can help find the right balance for individual situations based on personal goals and risk tolerance. 

Diversification and Risk Reduction

The primary purpose of portfolio diversification is to control risk. Generally, many small investments are considered safer than one large investment. By diversifying your portfolio into smaller individual investments, you suffer a smaller loss if one fails.

Optimized Returns and Tax Efficiency

Taxes are unavoidable, but the right investment strategy can help reduce your overall tax liability over time. Investment managers can help by using strategies such as maximizing contributions to tax-deferred accounts, holding investments to avoid higher taxes on short-term capital gains and tax loss harvesting.

Financial Security and Goal Achievement

Ideally, having your investment portfolio optimized by your investment manager will help create security through economic downturns and account for inflation. A well-managed portfolio will allow you to meet your financial goals over time.

Challenges of Investment Management

Investment management is not without challenges, especially when handling your finances on your own. Horizons Wealth Management offers a variety of wealth management services, working with you to develop an individual investment plan tailored to meet your goals.

Market Risk

Whether managing finances on your own or with an investment manager, market risk is always a concern. Market risk, also known as systemic risk, is the possibility of loss due to factors that affect the market. These factors include changes in stock prices, interest and exchange rates and political and economic situations (e.g. a recession). 

Credit Risk

Usually, bonds are considered a lower-risk investment. However, that does not mean they are risk-free. One of the main risks for bond investors is credit risk, which is the chance that a borrower fails to pay or meet the agreed-upon terms of a loan.

Liquidity Risk

Liquidity refers to how easily an asset can be converted to cash. When markets become or are predicted to become volatile, your first instinct may be to liquidate your assets to cash. 

However, this may not be the best option for achieving long-term goals. It’s difficult to know what the right choice is. Even professional investment managers cannot predict the future, but an experienced manager will have a toolbox of strategies to use in times of uncertainty.

Diversification & Concentration Risks

While diversifying your portfolio is generally considered safer than having concentrated assets, diversifying without proper research and understanding can also lead to loss. Conversely, some people concentrate their investments based on internet trends or advice from financial influencers, frequently leading to losses.

Behavioral and Regulatory Risks

Regulatory risk involves loss stemming from changes in regulations that affect a market, sector, business, or asset. The average person may not keep up with regulatory changes, and even with the information legal language can be difficult to understand and apply to your situation.

When to Hire an Investment Manager

Many people find themselves with several investment accounts—these could be from old jobs, family members or stocks purchased online. Or perhaps you have been intentionally investing for years and want to ensure you’re making the right choices. 

Whatever the source, investment management can be beneficial if: 

  • You are dealing with complex financial matters, such as tax strategy, inheritance planning, or retirement planning.
  • You are not certain about making investment decisions on your own, or would like a professional second opinion.
  • You want a service that can help manage other financial needs outside of portfolio management. 
  • You want someone else to manage your portfolio, rebalance assets, and provide guidance on updating your investment strategy over time.
  • You have experienced a significant change in income or a major life event, such as getting married, getting divorced, or having a child.

How to Choose an Investment Manager

When selecting an investment manager, several key factors should be considered, including their credentials, reviews, fee structures, and alignment with your personal financial goals and risk tolerance. A good place to start is by creating a list of your financial goals, ensuring the investment manager’s strategy aligns with your individual needs and circumstances. 

For example, are you new to investing? Do you already have many assets and need someone else to keep tabs? Are you looking on behalf of yourself or on behalf of an organization you’re part of? Do you know what specific areas you need help in? 

Finding the right match requires understanding your goals and aligning them with a manager who fits your needs. 

Is an Investment Manager the Same as an Advisor?

An investment manager is one type of financial advisor. Investment managers, portfolio managers, investment counselors, asset managers, and wealth managers all fall under the umbrella of financial advisors. Investment managers primarily deal with financial assets, such as stocks, bonds, and other securities. In contrast, financial advisors provide a broader range of services that encompass all aspects of an individual’s finances, including early retirement planning.

Bottom Line

Investing can quickly become overwhelming and complicated, leaving many people unsure of how to achieve their financial goals. This doesn’t mean you have to give up–professional investment management can help guide you. Horizons Wealth Management provides comprehensive financial planning, wealth management, portfolio management, and retirement planning services to help you navigate your investments and achieve your financial goals.

Investment Management FAQs

Is an investment manager the same as a financial advisor?

No, investment managers focus specifically on assets such as stocks, bonds, and other securities and how to use them to achieve financial goals. Financial advisors have a broader scope, looking at all aspects of an individual’s finances.

Is a financial advisor the same as a portfolio manager?

Financial advisors may provide advice on a client’s portfolio but typically deal in broader areas that encompass all aspects of financial planning. Portfolio managers are focused on advising, buying, holding, selling, and rebalancing client assets.

Do you need to hire a certified financial planner for investment management?

A CFP accreditation is not required to become an investment manager. However, the certification educates professionals on over 100 topics of financial management, ensuring they are educated in any areas or issues a client may have.

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Retirement Ahead
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Are you Ready to Retire?

Key Takeaways

  • Achieving financial stability for retirement requires a thorough review of savings, investments, and debt management to ensure you can sustain your desired lifestyle without financial stress.
  • Regular health assessments and planning for future medical needs are crucial in ensuring that health issues do not hinder the quality of life during retirement.
  • Clearly defining personal interests, hobbies, and travel plans helps create a fulfilling retirement experience by allowing you to enjoy activities you love while staying within budget constraints.

Retirement is a significant milestone, marking the transition from years of dedicated work to enjoying a more leisurely and fulfilling chapter of life. But how do you know when you’re truly ready to take this step? Deciding on retirement isn’t just about reaching a certain age or hitting financial targets; it’s also about emotional readiness, lifestyle planning, and personal goals.

This guide will help you explore key indicators such as financial stability, health considerations, personal aspirations, and social connections that signal your readiness for retirement. By examining these factors comprehensively, you’ll be better equipped to determine if now is the right time for you to embrace this new phase with confidence and excitement.

Financial Stability

Achieving financial stability is the most critical factor in determining your readiness for retirement. This involves a thorough evaluation of various financial aspects to ensure you can maintain your desired lifestyle without the worry of running out of funds.

  • Savings and Investments: Review all your savings accounts, including 401(k)s, IRAs, Roth IRAs, and any other investment portfolios. Ensure these accounts are well-diversified to mitigate risks while maximizing returns. It’s also essential to calculate how long these funds will last based on current withdrawal rates.
  • Retirement Accounts: Understand the rules governing withdrawals from different types of retirement accounts, such as required minimum distributions (RMDs) for traditional IRAs and 401(k)s starting at age 73.
  • Emergency Fund: Maintain an emergency fund that covers three to six months’ worth of living expenses to cushion against unexpected costs or market downturns.
  • Pension Plans: If you have access to pension plans through previous employers or government jobs, get detailed information about payout options—whether lump sum or monthly payments—and how they fit into your overall income strategy.
  • Social Security Benefits: Calculate when you should start claiming Social Security benefits since this decision significantly impacts your monthly benefit amount over time.
  • Inflation Impact: Consider inflation’s impact on purchasing power; plan accordingly by investing in assets that are likely to outperform inflation rates over time.

It’s best to consider consulting a financial advisor to evaluate your retirement readiness from a financial perspective. Luckily, Horizons Wealth Management can help answer the right questions. 

Debt Management

Effectively managing debt is crucial for a stress-free retirement. Here are key considerations to help you assess and manage your debt before retiring:

  1. Current Debt Inventory: List all existing debts, including mortgages, car loans, credit card balances, personal loans, and student loans.
  2. Mortgage Status: Evaluate how many years remain on your mortgage and consider paying it off early or refinancing for better terms.
  3. Credit Card Balances: Aim to pay off high-interest credit card debt quickly to avoid costly interest charges that could burden limited retirement income.
  4. Car Loans: Pay off vehicle-related debts ahead of time, reducing monthly expenses.
  5. Consolidation Options: Explore consolidating multiple high-interest rate accounts under one lower-rate agreement, reducing overall payment obligations and freeing up cash flow opportunities elsewhere within budget constraints imposed otherwise.

By systematically addressing each aspect—mortgage status, credit cards, car loans, consolidation options, budget adjustments, and seeking professional advice—you’ll enter retirement free from financial burdens. This will allow you to fully enjoy your newfound freedoms and pursue your passions with peace of mind and contentment.

Health Status

Assessing your health status is a critical factor in determining your readiness for retirement. Good health not only impacts your quality of life but also influences financial planning and lifestyle choices during retirement. Here are key considerations to help you evaluate and plan around your health as you approach this significant milestone:

  1. Current Health Assessment: Begin with a comprehensive evaluation of your current physical and mental health. Regular check-ups, screenings, and consultations with healthcare providers can provide insights into any existing conditions that might affect your retirement plans.
  2. Chronic Conditions: If managing chronic illnesses like diabetes, hypertension, or arthritis, ensure they’re under control through consistent medical treatment and monitoring adherence to prescribed regimens.
  3. Future Healthcare Needs: Consider potential future medical needs and anticipate the costs associated with ongoing treatments, medications, therapies, interventions, surgeries, and possible rehabilitation. Be prepared for unforeseen emergencies that could arise unexpectedly and significantly impact your overall well-being. Each case should be individually assessed to tailor a plan specific to your unique personal context, ensuring you are well-prepared both now and moving forward.
  4. Long-Term Care Planning: Explore options for extended-care scenarios that may require assistance with daily living activities. Consider home-based services, assisted living facilities, and nursing homes. Evaluate the coverage provided by insurance policies specifically designed for such eventualities, including Medicaid, Medicare, private insurers, supplemental plans, and hybrid plans that combine various types of protections. This approach helps maximize benefits while minimizing gaps in coverage and reducing exposure to risks.

By addressing these areas comprehensively, you can ensure a well-prepared transition into retirement with minimized risks and maximized benefits.

Lifestyle Goals

When considering if you’re ready to retire, defining and planning for your lifestyle goals is crucial. Retirement offers the opportunity to pursue passions, hobbies, and activities that you may not have had time for during your working years. Here are key aspects to consider when evaluating your lifestyle goals:

  1. Personal Interests and Hobbies: Reflect on what activities bring you joy and fulfillment. Whether it’s traveling, gardening, painting, golfing, or volunteering—ensure these interests can be sustained financially and logistically in retirement.
  2. Travel Plans: If exploring new places ranks high among your priorities, map out the destinations you envision visiting. Estimate the costs involved for the duration of stays, transportation, accommodation, food, and other related expenses. Plan accordingly to fit within your budget constraints comfortably without overextending resources unnecessarily or unwisely.

Thoroughly defining and planning for your lifestyle goals is essential when determining if you’re ready to retire. By identifying personal interests and hobbies that bring you joy and carefully mapping out travel plans while considering financial sustainability, you can create a fulfilling retirement experience. Proper preparation ensures that your post-work years are spent enjoying the activities you love without the stress of overextending resources.

Bottom Line

In conclusion, preparing for retirement involves more than just financial planning; it encompasses evaluating your health status, managing debt effectively, and defining clear lifestyle goals. By thoroughly assessing each of these areas—ensuring financial stability through diverse savings and investments, maintaining good health with proactive medical care, addressing outstanding debts to reduce stressors, and planning activities that bring joy—you can confidently transition into this new chapter of life. A comprehensive approach allows you to embrace retirement fully equipped to enjoy newfound freedoms while pursuing passions with peace of mind and contentment. At Horizons Wealth Management, we can help you reach your financial goals through our various services, such as wealth management and portfolio management. Let us help you kickstart your financial future today. 

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When Is It Time to Cut Your Kids Off From Your Finances?

Deciding when to let your children stand on their own can be tough, especially when they’re contending with student loans, underpaying jobs, or sky-high rents. But easing your kid’s entry into adulthood could be undermining your own financial security.

According to a December survey from CreditCards.com, three-quarters of parents are providing financial support for their adult kids.

But at a time when the majority of Americans haven’t socked away nearly enough for retirement—the median retirement savings for all working families in the US is just $5,000, according to the Economic Policy Institute—it makes sense to do a little less for our offspring, so we can think a little more about ourselves.

So, how do you figure out when and how to cut your kids off financially?  Learn more below.

Source: https://www.thebalance.com/when-to-cut-your-kids-off-from-your-finances

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Don’t bother wondering why your friends seem to have nicer homes, cars, and vacations — there’s only one measurement that matters

Basing your spending off how your friends spend their money is a huge mistake to make.  Large spenders may also be building crippling debt.

You won’t find a real answer to how you’re doing in a Federal Reserve survey or a social media feed.  You will find it by measuring yourself against rules of thumb, refined over decades and endorsed by financial pros  that point the way toward true financial health.

Start with these:

Source: http://www.businessinsider.com/why-you-should-ignore-others-when-setting-personal-finance-goals

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How Much Money You Need To Save Each Day To Become A Millionaire By Age 65

Becoming rich is nothing more than a matter of committing and sticking to a systematic savings and investment plan.

If you want to get rich, start investing- and start as early as you possibly can.

To illustrate the simplicity of building wealth over time, Bach created a chart detailing how much money you need to set aside each day, month, or year in order to have $1 million saved by the time you’re 65.

Next time you consider running to Starbucks for a $4 latte, think about this chart and consider redirecting that coffee cash to your savings.  Check it out here.

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Tony Robbins’ 10 Tips for Living Rich

If you want to be happy, but you’re having a tough time in life due to personal or financial issues, it’s important to take whatever steps possible — even small ones — to progress and grow.

This best-selling author’s advice has been featured prominently in magazines, digital media and in national televised media. He travels all over the country every month for events to inspire people in their lives and in business.

Click HERE for some of Tony’s top pieces of advice on how to change your mindset in ways that can have a positive impact on your life and your finances.

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The Boring Secret to Getting Rich

Many people dream of becoming rich but don’t have any idea how to make it happen.  There’s no magic formula, but there are many steps you can take to gain an advantage.  The secret to getting rich is simply doing what most people can’t.

Click here to learn Money Magazine’s boring secret to getting rich.

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In Your 20s? 30s? 40s? 50s? 60s? The Best Financial Goals for Every Age

We’ve devised a little roadmap of goals that everyone can follow to make sure they are meeting the right financial goals for their age.  Of course, you can accomplish any of these goals sooner, but this is a good general map of where you should be at any given age:

Learn more here.

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Financial Habits That Will Make You Sexier

Ditch the makeup and hair products. Your budgeting skills might be the thing you should really show off on your next date.  Money skills are more important than even good looks when seeking a mate!

In a recent survey about relationships and finances, MONEY found that both baby boomers and millennials agree on the three most attractive traits in a potential mate: a sense of humor, compassion, and—yes—financial responsibility. For both groups, those qualities all rank higher than physical chemistry, diligence, and even intellect.

Click here to find MONEY’s survey results on the most attractive traits.

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3 Reasons to Hire a Fee-Only Financial Planner

Do you have money to invest, but you’re not sure where to put it?  The stakes are so high in investing that you should consider fee-only planners. They’ll give you a fixed price up front for their services, regardless of the product they recommend. You won’t have to worry about conflict of interest.

Click here to learn why  you need a fee-only financial planner.

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