What Is the Difference Between Investment Management and Stockbrokers?

The Investment services industry can be daunting and ambiguous for individuals who seek a return on their capital. After working hard earning your wealth, it is important to understand the different services offered by professionals and what solutions fit you personally. Firstly, let's discuss what stockbrokers are - we all have a much better, clearer, idea of what they do and who they represent. Stockbrokers are regulated firms that offer financial advice to their clients.

A brokerage can specialize in any Investment niche they wish for example:

• FTSE All-Share stocks,
• AIM stocks,
• European Stocks,
• Asian Stocks,
• US Stocks
• Combinations of the above
• Straight equities,
• Straight derivative trading (CFDs, Futures & Options)

The main reason why investors choose stockbrokers over any other professional Investment service is simply down to control. Due to the nature of a brokerage firm, they can only execute a trade after you instruct them to do so. This means it is impossible for a brokerage to keep buying and selling securities without you knowing - known as churning for commission. This doesn't however prevent stockbrokers providing you with several new ideas a week and switching your positions to a new idea.

What are Investment Managers?

Investment management firms usually have specific portfolios with a track record, into which you can invest your capital according to your appetite for risk. These portfolios will focus on specific securities, economies, risk and type of investing (income, capital growth or balanced). All of this would be discussed prior or during the application process. Now we understand what stockbrokers / brokerage firms are about, let's discuss what investment management services can do for individuals.

The sign up with the service may seem long winded but it's in your best interest to ensure the service is suitable and appropriate for you. In reality, it's not a long-winded process at all. Once you agree to the services offered then you will only be updated on the on-going account data and portfolio reporting in a timely manner. Another method used by Investment management firms is different strategies implemented by their portfolio managers. These strategies are systematic and go through thorough analysis before investment decisions are made. The fees usually associated with investment management firms can vary from each firm.

There are three common types of fees and are usually combined, fees can be. The main benefits provided from Investment management firms is that after the service understands your needs and tailors the service around you, it is their job to build a portfolio around you. It is also the job of the investment management firm to adhere to the investment mandate you agreed on, we'll take about this later, so you understand of the time frame given what you should expect. Another bonus why high-net worth individual choose investment management services is because they are not hassled by phone calls every other day with a new investment idea.