Asset management is a large and important global asset management industry with a total value of $100 trillion dollars for 2017. Asset management, as a business, includes aspects such as finding professional investment managers, research (of individual assets and their classes), conducting trading operations, marketing, internal audit and reporting to clients.
The largest investment managers are companies with a complex structure corresponding to the size of the assets they control. In addition to investors and asset managers, the management company also employs compliance officers, internal auditors, financial auditors, computer specialists and back office staff.
Among the problems of doing such business are the following:
revenue is directly related to market valuations.
outstanding returns are difficult to maintain at a constant level, and large shares of the Fund can be withdrawn by clients during periods of lower returns.
the company has to bear the heavy costs associated with hiring successful asset managers.
the Fund's return is most dependent on the ability of asset managers, but clients are more likely to believe in some unique investment idea and internal discipline of the company than in the ability of a few people involved in asset allocation.
many successful analysts, working in the field of asset management, accumulate enough funds to leave the company in the future and earn the management of their own assets.
The most successful investment companies in the world are those that have been able to physically and psychologically separate themselves from banks and insurance companies. The best results and the most successful business strategies (in this area) usually belong to independent investment companies.