Asset Management

Rather than merely providing advice on investing to their clients, investment banks also offer to manage the funds of clients on their behalf such that investment decisions are taken by the investment bank directly. Clients will seek to delegate their portfolio management partly for convenience but also to make use of the superior information investment banks have about the market and their skills in managing portfolios. Asset management is an important service investment banks offer to wealthy clients and institutional investors. Apart from generating stable fee income for investment banks, it also serves as a tool to maintain personal contacts to investors, who are often in leading positions of companies that would be potential clients in other business lines, such as securities underwriting and mergers and acquisitions advisory. They might also be using financial innovations to optimise their tax position or hedge-specific risks. However, investment banks also face competition in this line of business from many private banks and investment consultancies.