What is asset management: Lawyers as asset managers

Know more about what is asset management, what do asset management lawyers do, and the some of the governing laws of Canada on asset management
What is asset management: Lawyers as asset managers

Investors who are interested in knowing about asset management may refer to the Canadian laws that will govern such transaction, but they will soon find it exceedingly complicated. For this matter, asset management lawyers are able to break it down not only for the client, but also for fund or asset managers alike.

What is asset management?

Asset management is the service of growing the resources of another for the mutual benefit of the asset manager and the asset’s owner. Generally, it involves financial activities to increase the wealth of a person ensuring maximum returns of their assets. It includes advisory services and the actual management of the assets entrusted to it.

Its steps may be summarized into:

  1. Assessment of assets from individuals, institutions, or financial entities
  2. Making offers on various investment strategies based on the client’s –
    • long-term financial objectives, and
    • investment risks that they’re willing to take
  3. Regular maintaining and trading of the client’s investments or portfolios

The services of asset management are usually engaged by:

  • Private investment funds
  • Insurance companies
  • Pension funds
  • Special-purpose vehicles
  • High-net-worth individuals

Asset Management Vehicles

In Canada, structures of asset management vehicles or funds may be organized into:

  • Corporations: incorporated either federally, or provincially/territorially, where investors become shareholders of the corporation
  • Trusts: which are also regulated by the provincial/territorial securities regulators, where investors are issued with mutual trust fund units
  • Limited Partnerships: where investments from limited partners are managed by the general partner

What do asset management lawyers do?

Asset managers can either be individuals, professionals, or financial institutions offering asset management. Aside from them, lawyers can also practice asset management.

While asset management lawyers do not fall far from what a typical asset manager does, they have the advantage of having extensive knowledge of the laws and regulations governing assets and securities.

Asset management lawyers engage clients in the legal advisory on the following subject matters:

  • Establishment of new funds and the regulations related to its creation
  • Compliance with laws and regulation on tax and securities
  • Application of international laws that apply to foreign investment transactions
  • Fiduciary duties of fund managers or trustees and the consequences of such duties
  • Legal counselling when litigations arise

Watch this video to know more about what is management and what are the responsibilities of asset managers:

To know more about what is asset management and what asset management lawyers help clients with, consult with an asset management lawyer near your area. If you’re in Montreal, contact any of the best investment funds and asset management lawyers in Québec.

What are the rights of asset management companies?

In connection to knowing what is asset management, a client must also know what are the rights of its asset managers in handling its investments or assets.

Asset management rights may include the following:

  • Receive the necessary fees for the services it renders to the client (i.e., management fee and other contractual fees)
  • Making the necessary changes to the client’s portfolio, subject to keeping the best interests of the client in mind
  • Advance the necessary expenses for the protection of the client and its assets, and receive reimbursement for these expenses

However, specific rights are expressly spelled out in the contract between the clients and the asset manager. When in doubt, asset management lawyers can interpret these rights and other conditions as found in the contract.

What are the obligations of an asset management company?

In relation to the rights of asset managers in maintaining the investment portfolios of their clients, they also have certain obligations to their clients.

This is based on the fiduciary relationship established between the two parties. It means that such a relationship involves trust and confidence, which must be sustained by the asset manager. As such, due diligence must be exercised by these managers in the day-to-day maintenance of their client’s investments.

As a client, aside from learning the ropes of what is asset management, it is also prudent to know these obligations that must be demanded from their asset manager.

The major obligations of asset managers include:

  • To communicate regularly with their client about the changes it makes regarding the client’s investment portfolios
  • To ensure that the investment of funds conform with the laws and regulations imposed by the government or regulatory bodies
  • To maintain proper accounts, records, or documents of all the transactions with the client and how its investments were handled

Are asset management firms or asset managers regulated in Canada?

Due to its large impact on the financial industry of a country, the industry of asset management in general is regulated under the laws and by the government.

Regulation of asset management firms or asset managers is also called asset management compliance. It ensures that firms and managers observe industry laws and government regulations and policies. This also includes holding firms and managers liable for any violation – or worse, for any criminal activity.

Canadian regulation of asset management

In Canada, asset management falls under the regulation of securities by the different provinces and territories. While there is no federal law and regulatory agency for securities regulation, each province and territory enacted its own law and established their own securities regulator.

For example, some of these provincial and territorial laws and regulators are:

  • Ontario: Ontario Securities Commission
  • Québec: Autorité des marchés financiers
  • British Columbia: British Columbia Securities Commission
  • Alberta: Alberta Securities Commission
  • New Brunswick: Financial and Consumer Services Commission
  • among the other Securities Commission in the remaining provinces and territories

These provincial and territorial commissions form the Canadian Securities Administrators (CSA). The CSA is the umbrella organization of these commissions which aims to harmonize policies and regulation of securities across Canada.


Aside from governing asset management in Canada, Canada’s laws also provide that asset managers must be registered under the National Instrument 31-103 (NI ‘31-103’). This instrument governs those who are engaged in the business of dealing, trading in, managing, or advising on investment funds – which includes asset managers.

To know more about what asset management is or if you’re looking for asset management lawyers, contact the Lexpert-Ranked best investment funds and asset management lawyers in Canada.