Reference no: EM133184008

Running an Investment Management Firm

Running an investment management business involves many responsibilities. The firm must hire professional managers to deal, market, settle, and prepare reports for clients. Other duties include conducting internal audits and researching individual assets-or asset classes and industrial sectors.

Aside from hiring marketers and training managers who direct the flow of investments, those who head investment management firms must ensure they move within legislative and regulatory constraints, examine internal systems and controls, account for cash flow and properly track record transactions and fund valuations.

In general, investment managers who have at least $25 million in assets under management (AUM) or who provide advice to investment companies offering mutual funds are required to be registered investment advisors (RIA). As a registered advisor, they must register with the Securities and Exchange Commission (SEC) and state securities administrators. It also means they accept the fiduciary duty to their clients. As a fiduciary, these advisors promise to act in their client's best interests or face criminal liability. Firms or advisors managing less than $25 million in assets typically register only in their states of operation