6 Tips on Choosing an Investment Manager
Hiring an investment manager can be costly. There is work on the table: dealing bonds or stocks, monitoring funds, settling transactions, measuring performance, and preparing reports to regulators. It is only fair to pay the services of the person entrusted to build and manage your portfolio. So, how do you choose one?
1. Set your objectives
Your financial goals will determine whether you need a portfolio manager. Once you have them in place, you can start hiring someone to look after your funds. Not only in the aspect of overseeing but also in helping you understand the state of your finances so you can plan your investing strategies.
2. Decide on the type of investment manager
Who do you want to handle your investments, an independent licensed adviser or an institution? An aligned financial adviser works in institutions and big industry players. If you opt for a financial services firm, then you must know the person handling your account. Make sure your core principles and that of the manager align.
3. Look for one with dedicated personnel handling the fund
A manager handling multiple accounts might have to multitask and overlook some crucial details. Choose someone who can spend time on monitoring your investment.
4. Know the investment strategy
You can choose from three options: growth, balance, and conservative. A multi-strategy approach would lower the risks. Identify your investment benchmarks. Your portfolio manager reminds you to stick to your investment goals and strategies.
5. Assess the portfolio’s performance and track record
How does the current investment perform? Remember, past performances do not guarantee future success, but at least, you have a reference. Check the qualifications, the size of the portfolio, portfolio turnover, and the type of companies the manager has previously invested.
6. Understand the fee structure
Set realistic expectations about the returns and the fees. Some investment managers ask for high service fees. Negotiate with your manager on the rates.
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