refers to the use of customized investment approaches to provide
investment management services. These services are generally
utilized by corporate and public pension funds, endowments,
foundations, and high net worth individuals.
There are several
methods of managing capital. Generally,
the goal of capital management is to expand capital and income at a
rate in excess of inflation, while at the same time preserving
principal. In addition, effectively managing risk helps to avoid
financial distress and maintain financial performance within the
guidelines that is acceptable to investors.
The proper blend of
bonds, cash equivalents, and a range of diversified equities will
generally make up a customized plan. Therefore, an investor
evaluation process is undertaken to determine not only the clients’
goals, but their investment objectives, risk tolerance, tax status
and rate, projected future cash flows, philanthropic and other
goals, and current and future income requirements. Without this
knowledge and understanding, a customized asset allocation for a
client would not be possible.
entails a research prior to making or acting on any investment
decisions. It is important to analyze the economic, political, and
technical factors that could affect investment performance. This
includes an understanding of world markets, detecting shifts in
consumer preferences, government spending, and capital spending, and
recognizing changes in investor preferences.
management firms act not only as advisors, but also as a financial
partner to their clients. Some additional services offered by
capital management firms can include succession management, sales
and marketing support, business strategy, analysis and execution,
recruitment, start up and lift out assistance, and collaboration
When choosing a
capital management firm, it is imperative that the advisors have the
proper character, background, and experience to work seamlessly with
their clients and maintain a successful partnership.
The terms “capital
management”, “wealth management”, “financial planning” and others
can mean different things to different professionals and experts. Investors should first determine their needs and then work to
select a professional who fits those needs.