What Is Asset Management? [2023’s Full Guide]
Last Updated: March 10, 2023
If the questions of what is asset management and how you can benefit from it interest you, you’re at the right place to find out all you need to know on the subject.
In this article, we’ll present simple and easy-to-understand definitions and explanations, and explain how asset management works.
Moreover, we’ll cover different types, along with the benefits tracking assets and managing them properly can bring to you or your company.
Let’s dive in!
What Is Asset Management?
Asset management refers to organizing and managing different types of assets with the end goal of increasing their worth or optimizing their use to ensure they provide maximum value to their owner.
Asset management involves different activities related to the assets managed, but in broad terms, they can be listed as:
- Organizing and overseeing different types of assets
- Organizing maintenance schedules
- Regular tracking and updating activities
- Making purchasing decisions
- Managing inventory
- Monitoring and scanning different equipment.
The asset management definition can vary depending on the type of asset managed. However, it generally implies the activities and processes that provide accurate data on the condition, allocation, and state of the assets at all times to ensure proper planning and decision-making.
|DID YOU KNOW: Management of finances is among the best-known asset management services, providing financial asset solutions for questions like what the best-priced stocks to buy right now are that align with your long-term goals. To increase your chances of making money, you can read more on how to start your investment business.|
How Does Asset Management Work?
Implementing an asset management system involves multiple steps aimed at increasing total wealth and providing individuals and corporations with a service that complies with their goals, preferences, and risk tolerance.
Usually, it’s a service provided by a company or even individuals, depending on the type of asset and clients at stake.
At the very start, it’s crucial to determine the type of asset management software or service most suitable for you or your company.
Preparation for asset management consists of listing, grouping, tagging, and tracking assets properly. This is the starting point of overseeing assets, which helps identify duplicates or the items considered lost, as well as those inconsistent with the goals and strategy of the client.
Once the company asset management is established, the whole process runs smoothly and involves regular checks and updates.
In some cases, asset management means tracking assets through QR codes or other suitable ways. This helps define their life cycle, expenses, and timeline, making sure they meet the optimal conditions for operation and can contribute to the optimal allocation of resources.
The service also involves making the necessary decisions in the client’s name or advising the client according to his desires. Naturally, market trends, research, and other reliable sources are very important in the decision-making process.
|Asset management meaning stands for acquiring value and increasing the total wealth of companies or individuals by managing assets, following their goals and preferences, and mitigating risks.|
|Asset management consists of listing, organizing, tracking, maintaining, and making the most out of different types of assets for companies or individuals.|
|There are different kinds of asset management with various features and goals depending on the type of asset managed.|
|These systems are crucial in making well-informed, data-driven decisions that lead to minimizing costs and maximizing profits.|
Types of Asset Management
For different companies and types of assets, there are numerous asset management solutions with features aimed at specific needs.
The key to using all the benefits of asset management is choosing the system that suits your needs best. To determine what’s the best option in your case, read the simple explanations of different asset management systems:
Fixed Asset Management
Often referred to as PP&E (property, plant, and equipment), fixed assets include all the inventory the company uses to generate income, and that usually stays in the place of installation throughout its life cycle—it’s usually machinery, plumbing, production systems, etc.
These assets represent a significant investment, and their value and performance tend to depreciate over time.
Fixed asset management can:
- Simplify the maintenance and cut its costs
- Preschedule preventive maintenance and keep track of all the activities on the equipment
- Track who, when, and how is using the equipment
- Provide constant monitoring if certain conditions have to be met for the equipment to work properly
- Gather data for further analysis
- Simplify recycling, uninstalling, or selling at the end of asset life cycle.
Establishing an asset management process for fixed assets can cut costs and ensure the company uses all its resources in the most cost-effective manner.
Digital Asset Management (DAM)
A popular kind of asset management is the management of digital resources and content, which involves adequate organization, processing, and storing, as well as protection of a digital asset.
Regardless of whether your company owns or sells digital products, keeping all the available content in an organized and easy-to-access manner ensures:
- The information storing and sharing is more cost-effective, easier, faster, and more transparent
- All the resources are organized properly and easy to search trough
- Decision-making processes are more data-driven
- The data is safer.
And these are just some of the aspects of why asset management is a good choice in different types of companies!
IT Asset Management (ITAM)
This type of asset management involves protecting the hardware and software owned by the company and making it easier to track, organize, and share.
Hardware includes all computers, equipment, monitors, routers, and similar, while software refers to company-owned licenses, programs, subscriptions, etc.
IT asset management not only makes it easier to track, maintain, and plan according to assets’ life span, but also provides data security, instant sharing, protection from unauthorized access, viruses, and more.
It also provides a safe and comprehensive platform for sharing documents and secure exchange of instant messages, calls, or video meetings. Therefore, it’s a very important system for most companies using these types of communication.
Infrastructure Asset Management
When it comes to infrastructure, the asset management industry is oriented toward overseeing assets that are part of the necessary equipment which makes a place habitable.
Infrastructure includes roads, water and electricity access, civil engineering, transportation options, garbage control, and more.
Infrastructure asset management includes maintaining, tracking, and finding the best possible ways for infrastructural goods to be recycled, removed, and replaced when they’re no longer functional.
As this is very important, many government entities use asset management to provide the best solutions for infrastructure maintenance and planning.
Enterprise Asset Management
Enterprise asset management differs from the other types, as it represents a complete approach to organizing, monitoring, and tracking all the company assets throughout its life cycle, including infrastructure, productivity, documentation, and more.
For this reason, the enterprise asset management system needs to be highly customizable and provide the users with a wide range of easy-to-adapt data.
The appropriate visualization of data, features of generating different notifications, emails, and more are very important in this type of asset management.
Depending on the company’s type and size, this system can have different levels and functionalities, but it’s crucial that it provides the necessary information to ensure proper decision-making.
Financial Asset Management
Financial assets may be the most traditional industry when it comes to asset management.
The activities consist of monitoring and managing a client’s investment portfolio to reach their goals following the level of risk they are willing to take.
This implies trading investments and maintaining and acquiring or selling new stocks and bonds, all with the purpose of increasing total wealth.
Managing a financial asset refers to a service provided by individuals or financial institutions to corporations, institutional investors, and individuals with high net worth. In some cases, the client’s asset management account is part of family heritage transferred from the previous generation.
|DID YOU KNOW: Besides individuals with high net worth, more financial institutions are offering this kind of financial service to middle or lower-level investors trying to create the best pension funds. This is a great way for regular investors to access excellent financial advice, whether through a brokerage firm, other companies, or using robo advisors.|
The Importance of Asset Management
The benefits of asset management are numerous, and they’re evident right from the beginning of system implementation.
For companies that define asset management properly, the overseeing of assets, their tracking, maintenance, managing life cycles, security issues, planning, scheduling, as well as allocation of resources are easier, more reliable, cost-effective, and overall improved.
Asset management eliminates the uncertainty of manually managed data, especially in big companies with numerous locations. It also increases accountability while lowering reliance on false or incomplete data in the decision-making process, as all assets are properly tagged, grouped, and monitored.
The asset management industry is focused on overseeing inventory and organizing maintenance schedules, as well as keeping track of real-time data, emergency interventions, and all actions performed on an asset.
This simplifies the processes and makes them more cost-effective, and provides data that can be used in making purchasing decisions and other management activities.
After reading all about asset management and its different types, as well as the benefits it provides, you have a better idea of what these systems imply and how they work.
Providing simplified ways of overseeing assets and managing inventory can be just the thing your company needs to get a realistic overview of all assets and make smart choices on the next steps to boost productivity, save money, and make all the processes more effective.
Asset management focuses on organizing, grouping, and tracking assets, organizing maintenance schedules, keeping track of all the activities and trends, and gathering data to support decision-makers aiming for increasing total wealth.
Depending on the type of asset management, there can be different skills in demand in this industry. However, they often include strong analytical and communication skills, the ability to maintain a good relationship with clients and understand their needs, orientation to detail, and excellent knowledge of opportunities, trends, and behaviors of an asset.
After answering the question of what is asset management and what types there are, the question of whether it’s worth pursuing it as a career depends on many factors.
Overall, being an asset manager is a lucrative occupation that can provide you with a good income if all the conditions are met.