How Should Money Management Services Fit Into Your Plans?

There are many forms of financial planning services available today. In such a diverse environment, you'd be forgiven for wondering what the heck distinguishes money management from other kids of services. Dig into what money management services are, how they differ from other financial services, and how they might fit into your plans.

An Umbrella

Money management is an umbrella concept that covers tasks like budgeting, saving, investing, credit, personal finances, and retirement planning. Individuals, businesses, governments, and non-profit organizations use money management services to stay on top of their financial needs. Many mutual and pension funds also use these services. Endowments and foundations are common clients of the industry, too.


The goal is to pool large amounts of money into portfolios.  With the assistance of professionals, you can then start allocating the money for immediate usage, long-term needs, and growth. Your allocation decisions will hinge on what's most important to you. For example, a pension fund will likely focus on producing sufficient long-term gains through investment to provide for payments today and down the road. Much of the job boils down to balancing different imperatives so you can handle both present and future concerns.

Managing Complexity

The big thing money management services providers do is address potentially complex issues involving large investments. For example, a foundation that funds an art museum is likely to have access to significant assets and capital. Likewise, it may be subject to specific tax laws due to its status. A professional manager has to help the foundation handle its money well enough to produce investment growth, pay salaries, perform maintenance, and manage real assets. This all has to occur without endangering the foundation's tax status.


Given the broad issues most money managers and their clients are trying to deal with, it's usually wise for them to choose broad strategies. For example, many managers use a process called value investing. The goal of a value investor is to target income-generator investments like bonds and stocks while the prices are depressed. A manager might take a position in stocks in the hotel industry while tourism is down so they can get a good price and realize higher returns when things bounce back.

Managers help clients strategize by pairing their financial planning efforts with their goals. You'll look closely at what your income stream is, how your risk profile works, and what your potential investment targets are. From there, you'll set your strategy and let the manager do the work.