Asset Management

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What is 'Asset Management'

Asset management is the direction of a client's cash and securities by a financial services company, usually an investment bank. The institution offers investment services along with a wide range of traditional and alternative product offerings that might not be available to the average investor. The account is held by a financial institution and includes checking writing privileges, credit cards, debit cards, margin loans, the automatic sweep of cash balances into a money market fund and brokerage services.

BREAKING DOWN 'Asset Management'

The investment minimums required for this service generally restrict accounts to high net-worth individuals, government entities, corporations and financial intermediaries. This includes such products as equity, fixed income, real estate, commodities and international investments.

When individuals deposit money into the account, it is placed into a money market fund that offers a greater return that can be found in regular savings and checking accounts. Account holders can choose between Federal Deposit Insurance Company-backed (FDIC) funds and non-FDIC funds. The added benefit to account holders is all of their banking and investing needs can be serviced by the same institution rather than having separate brokerage account and banking options.

These types of accounts resulted from the passing of the Gramm-Leach-Bliley Act in 1997, which replaced the Glass-Steagall Act. The Glass-Steagall Act was created during the Great Depression and did not allow financial institutions to offer both banking and security services.

Asset Management Account Snapshot

Merrill Lynch offers a Cash Management Account (CMA) to fulfill the needs of clients who wish to pursue banking and investment options with one vehicle, under one roof. The account gives investors access to a personal financial advisor. This advisor offers advice and a range of investment options that include initial public offerings (IPO) in which Merrill Lynch may participate, as well as foreign currency transactions.

Interest rates for cash deposits are tiered. Deposit accounts can be linked together so that all eligible funds aggregate to receive the appropriate rate. Securities held in the account fall under the protective umbrella of the Securities Investor Protection Corporation (SIPC). SIPC does not shield investor assets from inherent risk but rather protects those assets from financial failure of the brokerage firm itself.

Along with typical check writing services, the account offers worldwide access to Bank of America automated teller machines (ATM) without transaction fees. Bill payment services, fund transfers and wire transfers are available. The MyMerrill app allows users to access the account and perform a number of basic functions via a mobile device. Accounts with more than $250,000 in eligible assets sidestep both the annual $125 fee and the $25 assessment applied to each subaccount held.