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Wealth Architect · · 9 min read

The Investment Landscape: Who Does What—and Why It Matters

Understanding the key players in financial markets — how wealth advisers, fund managers, and custodians fit into your investment journey.

Before you start investing, you need to understand the lay of the land—who the players are, what role each one plays, and how the whole ecosystem works.

Having worked with private clients, I've often seen how a lack of understanding can lead to costly mistakes. People usually hesitate to ask questions about what they don't understand because they don't want to look stupid or are just driven by their egos.

Have you ever encountered someone who sits at a meeting, nods, and agrees to everything, only to find out later that this person had no clue what it was all about? Don't be that guy!

So think of this as your investment world orientation. If you're a capital founder—or plan to become one—understanding this map of characters will help you avoid pitfalls, navigate complexity, and spot opportunities others might miss.

This is a bird's-eye view of the financial markets ecosystem. We'll cover who the players are, how they make money, what drives them, and where potential conflicts of interest may lie.

Imagine you want to swim in the ocean. You should know who is a dolphin and who is a shark.

Let's dive in.

The Wealth Owners: The Source of Capital

Let's start at the beginning: where the capital enters the system.

According to Bain & Company, there is almost $300 trillion in global wealth, and institutional and individual investors manage roughly $150 trillion each.

So, broadly speaking, wealth originates from these two groups:

Institutional Asset Owners

These are pension funds, insurance companies, endowments and foundations, sovereign wealth funds, and corporations. They receive contributions from individuals, profits from businesses or donations, and their job is to invest these funds to meet long-term obligations—retirement payouts, insurance claims, scholarships, national reserves, etc.

Private Wealth

This is the money owned by individuals.

According to Altrata, in 2023, there were 38.1 million high-net-worth individuals (those with $1M+ in assets). Of those, 4.5 million had over $5 million in assets, collectively controlling around $90 trillion in wealth.

Despite global economic turbulence, the number of wealthy individuals continues to rise, and the family office sector is booming, too.

According to Deloitte, there were around 8,030 family offices globally in 2019. This number is projected to reach 9,030 by 2025 and 10,720 by 2030.

Here is the breakdown of the global population and wealth by tier.

It's important to note that there are millions more with under $1 million in investable assets. Most of their money is often in bank deposits rather than actively invested in the capital markets. So there is even more wealth.

From here on, we'll focus primarily on private wealth and its surrounding ecosystem.

Your Investment Options

As a private investor, your journey begins by choosing whether to invest independently or with professional help. So you can choose:

If you enjoy researching investments and are prepared to dedicate time, you can do it alone. But a good adviser can be invaluable if you want to grow and protect your wealth over the long term—and avoid costly mistakes.

It's like being given a car but not knowing how to drive. You could figure it out yourself… eventually. But wouldn't it be better (and safer) to learn from an instructor or get someone to drive you?

Retail vs Accredited Investor: Pick Your Character

Regardless of how you choose to invest, you'll be classified in one of two categories:

In the US, you're considered accredited if you meet two out of three criteria:

  1. Income: $200,000+ annually ($300,000 with a spouse) for two years.
  2. Net Worth: $1M+ (excluding your home).
  3. Professional Credentials: Have relevant qualifications like Series 7, 65, 82, certain professional certifications, designations, or credentials, individuals who are “knowledgeable employees” of a private fund or SEC- and state-registered investment advisers.

The UK and EU rules are similar.

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Pro Tip: You can choose to remain "retail" for core portfolios (added protections) and opt-in for accredited status selectively (if you qualify) for higher-risk opportunities.

What Wealth Advisers Do

All advisers share a common goal: helping you achieve your financial objectives through tailored investment strategies.

There are different types of advisers who you can work with, and it usually depends on your wealth level (as a rule of thumb but not exclusive):

Under $3M in Assets: Independent Financial Advisers (IFAs in the UK) or Registered Investment Advisers (RIAs in the US).

$3M–$30M: Wealth management firms or private banks, offering more extensive services (estate planning, personalised investment strategies).

$30M–$100M: Multi-family offices, as they are more sophisticated and personalized.

Over $100M: Consider a single-family office for total (in-house) control and customisation.

A good adviser will:

Your portfolio is like Lego. The adviser helps you build the proper structure, balance it, and swap out bricks when needed.

How Advisers Get Paid

Most advisers charge an annual Advice Fee of 0.5%–1% based on your Assets Under Management (AUM). Some may charge flat fees.

Potential Conflicts of Interest:

In developed markets, most advisers are client-paid. In emerging markets, commissions are still widespread and can be exorbitant. For example, structured products usually pay placement fees, which is ok and expected. But while in the UK, such commissions could be up to 2%, in some countries, they can go up to 5-7%.

Choosing an independent adviser paid exclusively by the client (i.e. you) mitigates this risk.

What to Ask About Adviser Fees

Investment Managers: The Portfolio Architects

Once your adviser aligns your strategy and asset allocation ts your strategy and asset allocation to align with your goals, an investment manager will manage your portfolio.

There are different types of portfolios.

Model Portfolios:

Bespoke Portfolios:

Investment strategies also differ by type.

Long-Term Investment Portfolios

Absolute Return Strategies

How Investment Managers Get Paid

Key Takeaway: Understand whether you aim for slow-and-steady growth (long-term) or more dynamic, unconstrained returns (absolute return). Both can coexist in one portfolio.

Fund Managers & Investment Product Providers

You also need to understand the difference between firms that manage client portfolios and those that run funds. Sometimes, it can be confusing, as both can be called Asset Managers.

Fund Managers (hedge funds, private equity, venture capital, etc.) operate individual investment strategies and funds (building blocks within your portfolio).

Portfolio / Wealth Managers construct and monitor your broader asset allocation using third-party or in-house funds or investment products.

Some large firms, like Goldman Sachs Asset Management or JP Morgan Asset Management, can perform multiple roles. In one part of the business, they run funds. In another, they advise and manage client portfolios. They can also have private banks, investment banks, brokerages, and other lines of business under their umbrella.

Regarding investment products, there is a wide range of all shapes and forms.

Individual Securities: Stocks, Bonds and Derivatives (including options, futures and swaps)

Pooled Investment Vehicles: Mutual funds, Exchange Traded Funds (ETFs), Investment Trusts

Alternative Investments: Hedge Funds, Private Equity, Venture Capital, Real Estate, Commodities, Digital Assets & Cryptocurrencies

Non-traditional Investments: Actively Managed Certificates (AMCs), Structured Products, Exchange Traded Notes (ETNs), etc.

Investments are also categorized by asset classes (equity, debt, alternatives, etc.).

These are the Lego building blocks of your investment portfolio.

Custody of Assets

The last component in the puzzle with which you, as a private investor, will interact is custodians.

Custodians are specialized financial institutions responsible for safeguarding client assets. They handle:

Safekeeping of Assets: Your stocks, bonds, ETFs, etc., are segregated from the custodian's own accounts.

Trade Processing: Settling and reconciling transactions you or your adviser execute.

Asset Servicing: Collecting dividends and interest payments and managing corporate actions (stock splits, mergers, etc.).

Regulatory Compliance: Custodians meet strict requirements (especially post-2008 crisis) to minimize risk and protect client assets.

Retail investors who work with their financial adviser in the US will most likely have custody of Charles Schwab, Fidelity, Pershing, LPL Financial, or Altruist. In the UK, they are called Investment Platforms, and some of the largest ones are Aviva, Standard Life, Quilter, AJ Bell, JustFA and many others.

Accredited Investors will likely have an account with a Private Bank, Wealth Management Firm, or Multi-Family Office, where they can access a broader range of financial products.

Important to remember

Holding client money is the most regulated and capital-intensive business (and rightly so!). If you consider a large financial institution a city, the custody business would be a fortress (or a vault) where all the treasures are held. And it will be the most protected.

Smaller private banks, wealth managers or family offices that have permission to hold client assets would usually be sub-custodians and also have custody with global financial institutions.

Some of the largest custodians are BNY Mellon ($46.6 trillion), State Street ($38.2 trillion), JP Morgan ($28.6 trillion) and Citi ($26.8 trillion).

Custodians usually charge a custody fee, which can be between 010% and 0.3% of the assets held. Other costs could include reporting, corporate actions, transaction fees, etc.

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Your statements should disclose and break down all fees. Read them carefully to understand what you are paying for. Fees can add up very quickly and impact your overall performance.

What is a Managed Account

You might have heard the term Managed Account, so let me explain what it means and how it works.

Managed accounts allow investors to use trusted custodians (like UBS, Goldman Sachs, Interactive Brokers) while allowing external advisers to manage investments directly from their accounts but not to withdraw or transfer funds.

Lately, this has been a popular set-up as everyone wins:

This concept is particularly popular in Switzerland, where it's called External Asset Management (EAM). Clients use private banks to hold their assets and for other banking services (like lending), but their investments are managed by specialist advisers.

Investment Infrastructure & Service Providers

Last but not least, it is the infrastructure and service providers that make all this happen.

Think of these as the "invisible engines" powering the market. You might not interact with them directly, but they play a crucial role:

Final Thoughts

So, we covered who is who in the investment world. While there is so much more to it, these are the key players in personal wealth management.

  1. Wealth Owners—both institutions and individuals.
  2. Wealth Advisers—help you create and execute your investment strategy
  3. Investment Managers & Fund Managers—manage portfolios and run funds.
  4. Custodians—safeguard your assets.
  5. Infrastructure & Service Providers—the behind-the-scenes engine that keeps everything running.

So, what can you do from here?

  1. Deciding if you'll do it solo or with an adviser.
  2. Choosing your status (retail or accredited).
  3. Building the right team, whether an IFA, RIA, private bank, or family office.
  4. Understanding fees and potential conflicts of interest.

You're not just building a portfolio. You're building a system that works for you long-term.

Welcome to the Game. Now, play it Smart.

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