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Andy Milner

Does Asset Management have a purpose?

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Andy Milner

An interesting attempt to agree a common definition of the purpose of Asset Management from the Diversity Project:


Purpose of Asset Management (a description for those new to the industry)


Asset management supports savers by helping to grow their wealth or to meet their requirements for income and to do so in a risk managed way.


The industry helps individuals to grow their savings to meet future financial needs such as a deposit for a new home or a pension in later life. It can also help charities grow their endowments and meet the income required for their charitable needs. It also helps large institutions, whether they are pension funds, insurance companies or sovereign wealth funds, to meet their objectives in looking after people’s financial security.


Asset management achieves these goals by allocating savers' money to investments with good future returns and prospects. As well as investing in existing businesses and assets, it also seeks out developments that need new finance - in companies, in property or in infrastructure projects - helping to provide jobs, support society and grow the economy. Asset managers seek to be good stewards of the companies they invest in.


Good stewardship involves making sure that the companies they invest in are being run properly and business risks are being managed appropriately. In particular, good stewardship ensures that companies are proactive in managing their responsibilities to the environment and society.


Some asset managers specialise in investing in opportunities to assist society and to provide the financing needed for the achievement of the UN Sustainable Development Goals. These goals include supporting society, building better transport, infrastructure and improving the environment. Asset managers support these aims through many different types of investments including those in schools, trains, hospitals, medicine, green energy and recycling.


The asset management industry also supports its own employees by providing them with rewarding and engaging careers. Given the complexity of investment markets and the wide-ranging requirements of its customers, it needs diversity of thought and perspectives if it is to be successful. 




Does asset management have a purpose or is it, in Lord Turner’s terms, “socially useless”?


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