Difference Between Investment Banking and Asset Management (With Table)

Management is a very crucial part of the field of banking. But when one talks about Investment banking and Asset management as similar terms, they are on the wrong side. Both these terms are used in banking and its management but are still very different. Investment banking and Asset management are the strongholds of the finance sector.

Investment Banking vs Asset Management

The difference between investment banking and asset management is that the former works on the selling side, whereas asset management works on the buying side. While investment banking sells products and services related to finance, asset management buys the same. It shows that both these sectors are opposite to each other.

Investment Banking is the sector of a bank that sells services like capital raising, mergers, and acquisitions to the government and corporate institutions as an advisory. In short, these banks are intermediates between a corporation and an investor. Corporations require an investment to grow in the market, whereas investors are the ones who invest in them.

Asset management is often considered a subordinate of investment management. It reflects as the backbone of business markets and other public support infrastructure. Asset management includes all the parts of physical as well as financial, and human capital assets.

Comparison Table Between Investment Banking and Asset Management

Parameters of ComparisonInvestment Banking Asset Management
SignificanceIt works on the selling part of different services.Asset management works on the buying and management part of goods and services.
ProfessionalismSelling the financial products and services if a job is done by an investment banker.On the other hand, buying those products and managing them is the work of an asset manager.
Skills Good-to-go skills in the sales part are typically required for an investment banker.Asset managers need to have a good grip over quantitative aptitude and analytics.
CapitalThe main job done by an investment banker is to raise capital on a regular basis.Asset managers work in the field of managing money and assets.
Skills and work cultureAn Investment banker should have good selling skills. Also, they are required to work 80-90 hours a week.They work more towards technical support rather than working on the selling part.

What is Investment Banking?

Investment banks and their banking methods are the financial assistance that provides advisory services to a government, corporation, or any individual. Investment banking comprises transactions based on financial capital. Investment banking is a lot different from commercial and retail banking. The investment banks don’t consider taking deposits from their consumers, unlike others.

The history of investment banking lies with the East India Company of Dutch. Being officially the first traded company, it was also a part of the stock exchange. From this company, investment banking created a special appearance in the finance sector. It now includes mergers, advisory assistance, underwriting, and other benefits.

It is divided into three core divisions viz. front office, middle office, and back office. The front office generates revenue in investment banking as well as in the market. Talking about the middle office, it handles the area of treasury supervision, risk controls, and designs strategies for corporations. The Back-office checks upon the conducted trades and works on the required changes in the transactions.

What is Asset Management?

The term asset management signifies the management and governance of the assets on behalf of others. This term includes physical assets as well as other financial and human capital assets. Physical asset management includes financial, economic, and management of practices. 

Public asset management is a bigger version of enterprise asset management and incorporates the handling of municipality and citizens.

Financial asset management is related to investment management. It signifies towards the sector of the finance industry that operates client accounts and funds for investment. Also, it covers all the aspects of client accounts and fund management. Asset managers are assigned by the finance companies to look after management work. An asset manager is someone who manages client assets according to the given investment aims and goals.

Similarly, Enterprise asset management(EAM) is the information system for an asset that manages an organization’s accounts and physical assets. When one talks about non-physical asset management, intellectuals assets are also incorporated in it. Assets like software, books, applications are used widely by users, and businesses are looked over by asset managers and are restrained by a license contract. 

Main Differences Between Investment Banking and Asset Management

  1. The former works on the selling side, whereas asset management is more inclined towards buying and managing money and other assets.
  2. An investment banker does the job of selling the products and services. On the other hand, an asset manager is known for buying and managing the same on behalf of others.
  3. Good sales skills are something that is mandatory in the field of investment banking, whereas asset management majorly focuses on quantitative aptitude and analytics.
  4. Raising capital is the job of an investment banker. On the other hand, managing the financial and physical assets is the job done by an asset manager.
  5. An investment banker works for the sales department of a bank, but an asset manager is bound to work as technical support.

Conclusion

Although, Investment Banking and asset management are subordinates of the same field, but are still quite different. Investment banking works on the selling side, whereas asset management works on the buying side. While investment banking sells products and services related to finance, asset management buys the same. 

Investment Banking is the sector of a bank that sells services like capital raising, mergers, and acquisitions to the government and corporate institutions as an advisory. On the other hand, asset management is often considered a subordinate of investment management. It reflects as the backbone of business markets and other public support infrastructure.

The term asset management signifies the management and governance of the assets on behalf of others, whereas investment banks and their banking methods are the financial assistance that provides advisory services to a government, corporation, or any individual. 

References

  1. https://link.springer.com/content/pdf/10.1007/978-3-540-93765-4.pdf
  2. https://link.springer.com/content/pdf/10.1007/978-94-007-2724-3.pdf
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