In the case of general asset management the bank executes orders at its own full discretion in the context of standard banking practice on asset management.
The typical management contract is subject to simple contract law. Commission applies to trading in securitised chartered rights.
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 specific (instruction bound) asset management, in the case of general asset management the customer places his assets (or a part thereof) under the complete responsibility of the asset manager, allowing the latter a free hand in investment decisions. In accordance with the nature of the contract the customer issues few instructions.
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
- Elaboration of investment strategy based on customer profile
- Implementation of the chosen investment strategy
- Monitoring the progress of deposits
- Adjustment/regrouping of investments
- Performance analysis
- Accounting and reporting
In the case of general asset management orders, the right to instruct is effectively replaced by the underlying contractual agreement. However, if the customer wishes to issue a specific instruction which is not consistent with the order to the bank, under certain circumstances the complete order must be revoked.