Asset manager liability

Asset manager’s liability : right to compensation and damages

Asset manager liability: What you need to know

Those who are wealthy or come to assets are not necessarily also experts in the field of money investmentor asset management. For this reason, in order to maintain the preservation of their own property and to increase the long term visibility of future, many investors use the services of a asset manager or a asset management company. Thanks to growing individual and family wealth and an ever stronger concentration of assets worldwide, asset managers are enjoying growing popularity. Asset management is a common practice to transfer the care for one’s own assets to a third party. A distinction is made between the care with disposition powers and a without the same powers. In most cases, one speaks of asset management if decisions about one’s own assetsare made by the management and within the framework of investment guidelines. In order to avoid conflicts of interest, a clear distinction between investment advisors and asset managers should be kept in mind when choosing a manager. In practice, however, the boundaries are often blurred. It should also be mentioned at this point that one also speaks of asset management if persons cannot completely manage their economic affairs themselves. In principle, the activity of an asset manager, if not advisable, can be assigned to any person or company.

The choice of the asset manager or the asset management company is of particular importance for a successful cooperation . Within the framework of a service agreement, the asset manager’s task in managing assets is always to represent the interest of the investor within the framework of the previously defined investment guidelines. Nevertheless, the investor should always be aware that the transferred and far-reaching powers can, in the worst case, mean his own ruin.
In addition to the competence of the asset manager in economic and investment strategy matters,trustworthiness and seriousness as well as the appropriate contractual framework of the cooperation should play a role. A control of the asset manager is indispensable and a constant review of the proper fulfillment of duties prevents unpleasant surprises in the long term.

Finally, it should not go unmentioned that even a professional asset management is not protected against, that general economic circumstances result in losses from investments. The question of whether the asset manager is liable for these losses and must pay compensation remains to be clarified individually at this point.

Overview of the liability of asset managers:

  • Lack of documentation on the part of the asset manager
  • breach of investment rules
  • Incorrect settlement with tax authorities
  • Insider trading
  • Lack of reporting
  • breach of the duty to inform
  • Lack of risk diversification
  • breach of duty of care

How we support you in case of liability of the asset manager:

  • Review of the investment guidelines
  • Review of the contractual relationship between manager and investor
  • Legal advice
  • Establishment of actual liability
  • Support with the obligation to provide evidence and proof
  • enforcement of claims for damages

How we support you in the field of asset management:

  • Yield increase through tax optimization
  • Development of investment guidelines
  • Development of contract concepts
  • Estate administration
  • Execution of wills

Helpful further articles on the subject of asset manager liability:

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About the author

Dr. Johannes Fiala Dr. Johannes Fiala

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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