This module first examines the “asset management process”-a set of activities that defines the relationship between the investment professional and the client. This relationship is one in which the consultative functions of learning the client’s goals, developing a successful and long-term working relationship, and providing recommendations regarding the array of investment vehicles are practiced, as opposed to the old product salesoriented approach. Central to the asset management process-a similar process to the personal financial planning model-are the five activities described in Figure 1. This process is discussed in the context of the investment professional’s daily work of assisting clients with investment selection, acquisition, and disposition.

Each step in this process-gathering data, establishing financial goals, analyzing information, recommending and implementing investment recommendations, and monitoring performance-brings the investment professional and the client into a closer relationship from which both draw important benefits.

The module then moves into focusing on the client: how he or she might be profiled with respect to investment style and risk aversion, and how investors behave in the changing marketplace. This understanding of the “inner” client needs to be united with what is known about the client’s resources and goals, and reflected in a formal investment policy statement to guide future action. We examine both the purpose and the importance of the formal investment policy, including the investment professional’s role as well as that of the client. A sound investment policy statement includes a number of minimum elements and key attributes. Finally, we consider the challenge that the investment professional faces when managing the relationship with the client during periods of change- change in the client’s personal and financial situation, and change in the economic environment.

Figure 1: The Asset Management Process

Author: Jennifer Coombs

Jennifer Coombs is an associate professor at the College for Financial Planning. Prior to joining the College, Jennifer spent a decade working in the financial services industry in New York City, with a special focus on equity research and analysis. She holds a Bachelor of Science degree in Finance and Political Science from Clarkson University. You can contact Jennifer at

Complexity Level: Intermediate