Asset management or financial portfolio management is offered in Germany by banks or independent asset managers. The latter group also includes so-called family offices, if they are approved for this purpose. By the term we understand a financial service that allows the asset manager to independently make and implement investment decisions for his clients. Due to the high level of responsibility, this activity requires the approval of the Federal Financial Supervisory Authority (BaFin). This is anchored in the German Banking Act (KWG).
The basis of the asset management is the asset management contract. It regulates the structure and the risk content of the investments to be made, takes into account the personal situation of the client (individual asset management) or offers standardized solutions within the scope of certain risk parameters (standardized asset management). Often, standardized solutions are also offered as additional components for individual asset management mandates.
The requirements of the asset manager are extremely high. In addition to the KWG, the Securities Trading Act (WpHG) and a large number of additional provisions govern its daily routine. By adapting to EU directives, this trend has even intensified.
Despite groaning the regulation, regulation has led to a significant increase in customer protection and, in particular, independent asset managers in Germany have been able to benefit considerably over the last 20 years.
If one considers which conflicts of interest the asset managers have in their day-to-day business, then one should not actually concern themselves with the subject of asset management.
The biggest conflict of interest at all lies in the fact that he should, on the one hand, advise and manage objectively and independently, but on the other hand also earn money. If one considers now that he can control this himself, the discrepancy becomes obvious.
Another conflict of interest may be the integration of in-house products, such as through in-house funds or certificates, in the context of asset management. Who e.g. Even when an independent consultant accompanied depot check-ups, until a few years ago it was easy to see where deposits were kept without knowing the custodian bank. It was also possible to see at what point in time certain funds were bought into depots, namely new issues. Placement pressure and self-interest determined the investment decision to the detriment of the client's interest.
Remember press articles in business papers about so-called penny stocks in Vancouver. There were allegedly but actually companies on the ground you put the spade in the ground and then collect gold nuggets. The courses doubled in no time, then break down again. Front running is called this type of business. One buys marked titles and drives their courses through such articles in the sky, in order to sell itself then. Even an asset manager would have had the opportunity in a modified form.
Of importance may also be the agreed fee models. In addition to asset management fees, will transaction-based transaction costs and profit-sharing fees be charged? How should you make the client right? If the asset manager calculates only a fixed management fee, then he earns his money while sleeping. If he is paid in addition to turnover-related transaction costs, he may have an interest in as much sales (churning), or is a profit-sharing in the room, then he may take a higher risk.
This list is far from complete. There are certainly a large number of other conflicts of interest that an asset manager encounters in day-to-day business. However, these should not be mentioned here because of their multitude.
Lawmakers now require asset managers and banks to identify these conflicts of interest and take appropriate countermeasures to prevent abuse. In-house auditing and compliance departments oversee auditors and regulators externally review business operations and regulatory compliance. For example, Employee transactions in the securities sector are approved and monitored with regard to front running. In addition, no employee transaction against client orders may be made, client deposits are examined for churning facts Hidden costs must be disclosed to the client.
A good asset manager today is characterized by a sense of responsibility and conscientiousness. He must respond to client needs and assess whether an asset management strategy or investment product is appropriate and appropriate for his client. He also has the obligation to certify the client the inappropriateness of a strategy.
"A 75-year-old grandmother with Euro 30,000, - savings and Euro 1,000, - monthly pension is just not suitable for trading in complex financial instruments."
Asset management has its price. This is i.d.R. between 1 and 1.75% p.a .. In the past, this price was achieved by a variety of "set screws". There were fee models with low asset management fees, additional transaction costs and so-called reimbursements from fund companies, custodian banks and other issuing houses, but there were also fee models with high asset management fees and a refund of all external payments additionally received by the asset manager. The multiplicity of the clients decided i. d. R. for the model with the lower asset management fees. By 2017 at the latest with the introduction of the MIFID 2 guidelines, there will be the long-demanded transparency and ultimately the market will decide where the price for an asset management will lie.
Basically in the upward movement of markets maybe not, but in the downside then rather? An asset manager is responsible for the capital entrusted to him. He does not have the glass ball in which he sees the next day's prices and has to deal continuously with reports that sometimes trigger significant short-term market movements.
Due to the increased volatility, the business has become faster overall, so if necessary. sometimes has to be reacted. The phase of steady upward movement is probably over and was replaced by a JoJo development with a slightly positive basic tendency. The asset manager will probably deal with potential risks more cautiously than if you yourself make the decision. He will undertake risk control and perhaps hedge or reduce positions.
Says the multi-millionaire asset manager: "Keep My Capital". Comes the small saver and replies: "Tenfold it".
Basically, to say that there is no customer for whom it is good to turn to an asset manager and there is no customer for which you should exclude it in principle, rather it is the good old gut feeling and common sense of the decision for everyone individual must bring.
Do you feel that you simply have no confidence and the fees seem too high then look for an alternative or you are not the type for an asset management contract. However, if you have a good feeling and the charges are acceptable to you then just go to the administration and look for a conversation with a trustee. But do not lose sight of the facts.
Investor tip: for the first conversation with your "new asset manager": ask yourself questions that interest you and write down the answers. Request a call log and proof of a real-life sample deposit. Do not let anyone push you to make a decision and consult with someone you trust, if necessary. Compare at least 2-5 administrations and then make a decision.