How does your business manage its assets?
Are you proactively maintaining and optimizing your asset mix, or going with the flow and repairing machinery if and when it breaks?
In this article, we’ll explore what asset management is, the costs involved, and how assessment management works in practice.
What is asset management?
Asset management refers to the structured oversight, maintenance, and optimization of assets to ensure they deliver maximum value and performance over time. It spans financial assets such as stocks and bonds, physical assets like equipment and property, and intangible assets including intellectual property.
The objective is to grow long-term value by balancing cost control, opportunity capture, and risk management in line with broader strategic goals.
Understanding asset management
The main goal of asset management is to maximize the value of an asset over its lifecycle.
This includes subgoals like improving utilization, extending useful life, reducing unnecessary spend, and ensuring that assets contribute measurable returns.
Effective asset management also supports financial predictability by:
- Improving budgeting accuracy
- Strengthening forecasting
- Reducing unexpected losses tied to asset failure or underperformance
The role of asset managers
Asset managers are responsible for making informed decisions about how assets are acquired, used, maintained, and disposed of.
Their role extends beyond day-to-day oversight.
Asset managers evaluate asset performance, align asset use with financial and operational goals, and ensure assets support broader business strategy. In practice, this means balancing short-term efficiency with long-term value creation while maintaining visibility into costs, condition, and risk.
Investment strategies employed in asset management
Asset management relies on intentional, deliberate investment decisions, not reactive spending.
Common strategies that asset managers employ include:
- Prioritizing capital toward high-performing assets
- Timing maintenance, upgrades, and replacements to avoid diminishing returns
- Reallocating resources away from underutilized assets
These decisions are guided by performance data, lifecycle costs, and expected future demand, ensuring capital is deployed where it generates the greatest impact.
Risk management in asset management
Managing risk is a core component of asset management.
This involves identifying financial, operational, and compliance risks associated with asset ownership and use. Asset managers mitigate risk through diversification, preventative maintenance planning, insurance strategies, and ongoing performance monitoring.
Key aspects of asset management
Key aspects of asset management can be grouped into how different asset types are managed, the processes that support them, and the benefits they deliver to the business:
Financial asset management
Financial asset management focuses on overseeing investments such as cash, securities, and other financial instruments. The goal is to preserve capital, generate returns, and maintain liquidity while aligning investment decisions with the organization’s risk tolerance and financial objectives.
Physical asset management
Physical asset management is focused on tangible assets such as vehicles, buildings, and equipment.
The emphasis here is on:
- Maximizing asset uptime
- Controlling lifecycle costs
- Extending useful life
Asset management processes
Asset management relies on a structured, repeatable process.
Assets are identified and recorded, performance is tracked over time, and decisions are made based on cost, risk, and expected value. This process typically includes acquisition planning, ongoing monitoring, maintenance or optimization, and eventual disposal or replacement.
Consistent processes ensure asset decisions are based on data rather than assumptions.
Benefits of effective asset management
Strong asset management programs:
- Improve financial control
- Reduce waste
- Support better decision-making
- Help businesses allocate capital more efficiently
- Reduce operational risk
- Drive insight into how assets contribute to business performance
Types of asset management
Types of asset management vary based on who the assets belong to and how they are managed, but all share the same objective of protecting and growing value over time.
These are the most common types:
- Investment management: Investment management focuses specifically on managing investment portfolios (equity, fixed income, securities).
- Wealth management: Wealth management takes a broader view, incorporating financial planning, tax considerations, and estate planning into standard investment management.
- Institutional asset management: Serves organizations that include pension funds, endowments, insurance companies, and corporations that manage large pools of capital
- Retail asset management: Designed for individual investments that manage personal or household assets like mutual funds, exchange-traded funds, or managed accounts.
The cost of asset management
The cost of asset management reflects the expertise, systems, and oversight required to manage assets effectively over time. Understanding how these costs are structured helps organizations and individuals evaluate value rather than focusing on fees alone.
Typical fees associated with asset management services
Asset management fees can be charged as a fixed fee, a percentage of assets under management, or a combination of both.
Investment and wealth managers often charge an ongoing management fee that is tied to portfolio value. Institutional arrangements may also include a performance-based component.
For physical or operational asset management, costs are more likely to appear as service fees covering monitoring, reporting, maintenance planning, and lifecycle analysis.
Factors influencing asset management costs
Several factors drive asset management costs, including:
- Portfolio size
- Asset complexity
- Required level of customization
- Reporting requirements
- Regulatory obligations
- Level of analytics required
- Risk exposure
Cost-benefit analysis of asset management
Effective asset management can reduce losses, extend asset life, improve returns, and prevent costly failures or inefficiencies. When measured against avoided risk, improved performance, and stronger financial predictability, the net value of asset management often exceeds its direct cost.
The focus should be on whether asset management improves decision quality and long-term results rather than on minimizing upfront expense alone.
How asset management works
Asset management centers on managing assets through defined stages, supported by technology and strong client engagement to ensure decisions remain aligned with objectives over time.
The lifecycle of asset management services
Asset management follows a lifecycle that always begins with understanding objectives and constraints.
Then, assets are identified, evaluated, and structured based on performance expectations, risk tolerance, and time horizon.
Ongoing monitoring tracks asset performance, costs, and risk, prompting adjustments as conditions change over time.
Asset managers may rebalance, upgrade, optimize, or divest assets to maintain alignment with changing goals and market conditions.
The importance of technology in asset management
Technology plays a critical role in modern asset management by enabling accurate data capture, real-time visibility, and more informed decision-making. Asset management platforms support performance tracking, forecasting, reporting, and risk analysis at scale.
Automation reduces manual effort and errors, while analytics help identify trends, inefficiencies, and opportunities that would be difficult to surface through manual processes alone.
Client relationship management in asset management
Healthy client relationships are central to effective asset management.
Asset managers must maintain clear communication around performance, risk, and decision rationale.
Other aspects that build stronger client relationships include:
- Regular reporting
- Transparent fee structures
- Proactive engagement
- Ongoing alignment with client goals
Example of an asset management company
Asset management companies are businesses that provide professional oversight of client assets.
Typically, this involves the management of investment portfolios, meaning there is more of a focus on financial asset management than on physical assets.
These firms are responsible for allocating capital, monitoring performance, managing risk, and reporting outcomes to stakeholders.
How BILL helps asset management companies
BILL supports asset management companies by streamlining accounts payable, accounts receivable, and expense management in a single, controlled workflow.
By automating invoice processing, approvals, and payments, BILL reduces manual effort and operational risk while improving cash flow visibility. Integration with accounting systems ensures transaction data stays accurate and up to date, supporting cleaner reporting and stronger financial controls.
For asset managers, this means less time spent on back office processes and more focus on oversight, analysis, and client outcomes.
