Ben Carlson in his A Wealth of Common Sense says it’s important to understand the differences between investment management and financial advice. Here are a few: Investment management is about asset allocation, expected returns, risk tolerance and time horizons. Financial advice is about the use of debt, saving plans, tax efficiency, estate planning and ensuring your insurance needs are taken care of. Investment management is about managing investments. Financial advice is about managing investors. Investment management deals with financial capital. Financial advice deals with human capital. Investment management is about portfolio construction and risk management. Financial advice is about financial planning and emotional management. Investment management is about measuring portfolio performance by comparing results with predetermined benchmarks. Financial advice is about measuring performance against the only benchmark that really matters: your goals. Investment management is abou...
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