Concept
In the case of a specific asset management contract the asset manager must abide by the customer’s instructions.
Legal nature
Specific asset management contracts are subject to simple contract law. Commission applies to trading in securitised chartered rights.
Limits
Asset management describes the management of investments by a manager entrusted with the performance of such tasks. By contrast, in investment consulting the customer is willing to receive advice but does not surrender responsibility for management (e.g. customer places his own stock market orders).
In contrast to general asset management, in the case of specific asset management the customer indeed transfers the management of his assets (or a part thereof) to an asset manager (in most cases a bank), but he wants to retain control over those assets. The manager acts only on the basis of customer instructions.
Duties
The asset manager’s most important duties include:
- Duty of investigation/duty to provide information: goes further than in mere investment consulting
- Objective explanation
- Investor-oriented explanation
- Acting in accordance with instructions (implementation of the chosen investment strategy)
- Monitoring the progress of deposits
- Adjustment/regrouping of investments
- Performance analysisAccounting and reporting
- Record-keeping
Instructions
Specific asset management orders are defined by the instructions of the customer. In the classic version the manager is given practically no room to negotiate. He must execute the customer’s instructions and any deviation from legitimate instructions represents a lack of due diligence. Even if such instructions should turn out to be incorrect, the bank remains bound to them in principle.
