Question ‘Banks have moved from a practice known as asset management to the practice of liability management .’ Explain the differences in these two approaches and briefly discuss the role of...

ASSET MANAGEMENT
An asset management is a service provided by investment banks to its clients so as to properly
manage their assets and reap them rewards in exchange of the service charge which is paid by
the clients. “The company will invest on behalf of its clients and give them access to a wide
range of traditional and alternative product offerings that would not be to the average investor.”
( . ASSET MANAGEMENT. Available:
http://www.investopedia.com/terms/a/assetmanagement.asp#ixzz21gzLp8Bc. Last accessed
25TH JULY 2012.).The company which manages clients’ accounts invests on their behalf and
provides them sufficient alternative investment opportunities to make their investments in
different financial products. The main thing to be highlighted is that these services are generally
provided to high net worth individuals, corporate and Government who are special clients of the
corporation.
The process of asset management works on how the plan is set on investing in various asset
classes according to the tastes and needs of the investors. “An Asset Management Plan sets out
the framework for an agency to allocate appropriate resources and make strategic decisions to
support service delivery.”( ... ASSET MANAGEMENT PROCESS. Available:
http://www.capital.health.vic.gov.au/capdev/AssetPropertyManagementOperations/AssetManage
mentPlan/AssetManagementPlanProcess/. Last accessed 25TH JULY 2012.)There are various
asset classes such as equity, fixed income, currencies etc but the importance of each is to be
understood in the context of the individual and then his investment amount is to be allocated.
The proper feedback and review of the investment is essential in order to check whether the
investment remains within the desired level of the investor or his abilities and willingness to take
risks has changes emphatically so as the manager needs to reallocate his investments and make
the necessary changes which will suit him now. The process is explained below in the form of
charts.
(... (.). Diagrams on ALM. Available:
http://www.google.co.in/search?q=asset+management+process+diagrams&hl=en&prmd=imvns
&tbm=isch&tbo=u&source=univ&sa=X&ei=9QsRUMKdBILLrQfV_IGIDg&ved=0CHMQsAQ
&biw=800&bih=466. Last accessed 25TH JULY 2012.)
LIABILITY MANAGEMENT...