investment management investment & finance definition

The professional management of financial assets. Investment managers make investments on behalf of people, institutions, or pension funds. Although investment management has existed since the early 1900s, it really began to grow in the 1970s as concerns about the solvency of Social Security increased individuals’ attention to their retirement planning. In 1974, the Employment Retirement Income Security Act (ERISA) was passed, creating 401(k) private retirement plans. Those changes paved the way for firms to specialize in managing money for individuals and institutions.

The term asset management can be used interchangeably with investment management, but asset management is more likely to be used in reference to the industry as a whole, while individual investment managers are more likely to use the term investment management to describe what they do.