A lot of investors often find themselves at a place where they need to decide if they would like to invest with a boutique investment firm or opt to invest with one of the larger firms. The question is valid and a good one but it requires you to understand your goals and do a little self-reflection. In this article, we explain the difference between boutique investment firms and large firms to help you make a decision.
What is a Boutique Investment Firm?
A boutique investment firm specializes in services for a particular segment of the market. It could be specialized by the client asset size, industry, or transaction type. The firms offer very specialized services and have a tailored approach. It also provides a lot more flexibility.
Benefits of working with a boutique investment firm
While considering the different firm options, you might want to understand the benefits of choosing one. There are various benefits of working with a boutique firm and the best of them include higher flexibility, getting the best service, and prioritization of your needs.
What Makes an Investment Firm Large?
We all have heard about large investment firms like UBS, BlackRock, and Vanguard but there is something that makes them large.
There is no definition for it but if we look at the marketplace terminology, we can use assets under management and tie it to the definition of a market cap. So, when a firm manages assets on the mid to high end of the Mid-Cap range up through the Large-Cap, it can be considered a large firm. The firm may not employ a lot of employees but the cost of working with such large firms will be extraordinarily high which is why it is considered large. A lot of investors tend to look at the firm’s headcount as a way to distinguish large firms from boutique firms.
No matter how you like to look at it, let’s take a look at the benefits of working with a large firm.
Benefits of working with a large investment firm
A major benefit of working with a large firm is that they have spent a huge amount of time building the business, establishing the relationships, and innovating which is why they are in a strong position today. The primary benefits include access to a large number of investment specialists, a mature process that involves the latest technology, and the economic power to move markets.
Which Firm Size Should I Choose?
Irrespective of whether you choose to work with a boutique investment firm or a large firm, you need to understand your investing style. If you are someone who enjoys the personalized nature of an investment boutique firm, then it could be an ideal choice but if you enjoy the idea of a standard process and structure, you should go with a larger firm.
Consider your goals, investment style and risk appetite when choosing whom to work with and if you decide that a firm like New Era Asset Management is a potential fit for you, then we would love to talk.
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