External asset managers: custody, mandates and the LPOA
The EAM’s role, the client’s custody relationship and the authority defined by a limited power of attorney.
An external asset manager (EAM) — also called an independent asset manager (IAM) or external wealth manager — is a firm regulated by the Monetary Authority of Singapore (MAS) that manages a client's investments while the client's assets remain held in the client's own name at a separate custodian bank. The client signs a Limited Power of Attorney (LPOA) authorising the EAM to trade the account, but the EAM never takes possession of the money. This three-party split — client, custodian bank, manager — is what defines the model and distinguishes it from a private bank that both holds and manages the money.
The EAM and custodian bank have separate roles. This can give the client a choice of manager across banking relationships, but remuneration and product relationships still require review. Compare management fees, transaction charges and any third-party payments before agreeing the mandate.
What does EAM actually mean?
EAM stands for external asset manager. The terms independent asset manager (IAM) and external wealth manager (EWM) are also used. In the arrangement described here, the manager directs the portfolio under an agreed mandate while a separate bank provides custody.
How does the tripartite EAM model work?
Three parties, each with a distinct role:
- The client opens a custody account in their own name at a private bank and remains the legal owner of all assets.
- The custodian bank safekeeps the assets, executes trades, reports holdings and handles settlement — but does not decide the investment strategy.
- The EAM manages the portfolio under the LPOA: setting strategy, placing trades and reporting to the client, in exchange for a management fee.
The client can review positions and transactions through the custodian bank as well as the EAM’s reporting. Reconcile the two sources and agree how discrepancies will be investigated.
What is an LPOA and what does it allow?
A Limited Power of Attorney defines the EAM’s authority over the client’s custody account. The mandate commonly permits trading while limiting withdrawals or transfers, but the actual permissions depend on the documents agreed with the bank. Review those permissions, fee-debit arrangements and controls. Separate custody does not eliminate investment or operational risk. See the comparison of EAM, private bank and multi-family office arrangements.
Why do clients choose an EAM over a private bank?
Clients may choose an EAM for continuity of advice, coordination across banks or a broader investment mandate. Assess the proposed team, regulatory status, investment process, remuneration and conflicts. These factors vary by firm and cannot be inferred from the EAM label alone.
A concrete example
Read the analysis and conditions
Illustration: a family with US$50 million appoints an EAM to coordinate portfolios held at two custodian banks, with US$30 million at one and US$20 million at the other. The family signs the relevant mandates and LPOAs, specifying the EAM’s authority and restrictions. The EAM reports on the combined portfolio, while each bank provides its own account records. The family should review management fees alongside bank and product charges, and confirm how instructions and information are shared.
Discuss an external asset management mandate
Describe the assets, custody relationships and investment requirements to request an appropriate specialist introduction.
Discuss your requirements →How does an EAM fit with a VCC?
An EAM may compare separate custody accounts with a pooled Singapore VCC structure. Sub-funds can serve distinct mandates or strategies; a separate sub-fund for every client is not inherent to the model. Assess the operating trade-offs in an EAM VCC sub-fund platform. Larger family mandates may also require a comparison of family office structures and 13O/13U tax incentives.
Frequently asked questions
What is an external asset manager (EAM)?
An EAM provides investment management or advisory services while a separate bank holds the client’s assets. In a discretionary arrangement, a limited power of attorney defines the EAM’s trading authority. Review the firm’s permitted activities, the account mandate and the bank’s controls; separate custody does not mean the manager has no influence over investment risk.
What does EAM stand for?
EAM stands for External Asset Manager. It is the term Singapore and Swiss private banks use for an independent investment manager that sits outside the bank and manages client portfolios held in custody at the bank. The terms 'independent asset manager' (IAM) and 'external wealth manager' (EWM) mean the same thing.
What is an LPOA in the EAM model?
A Limited Power of Attorney (LPOA) is the document a client signs to let the EAM place trades and manage the portfolio in the client's custody account, while restricting the EAM from withdrawing or transferring assets out to third parties. It is the legal backbone of the tripartite EAM-client-custodian relationship.
Is an EAM the same as a private bank?
An EAM is separate from the bank providing custody. A private bank may provide both custody and investment management, depending on the mandate. Compare the actual responsibilities, investment range, fees and conflicts under each arrangement; separation alone does not eliminate conflicts.
VCC Singapore is an independent informational resource and is not a regulator, law firm or tax adviser. Licensing requirements and custody arrangements are set by MAS and individual banks and change periodically — confirm current rules before acting. This page is general information, not legal, tax or financial advice.