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What Investment Managers Do

July 20, 2017

They manage investments. Some of their clients do not have a clue what to do and need professionals; some serve in a fiduciary capacity and should engage them; and some have conflicting uses of their time and focus where managing their investments would be better served by outsourcing it.

Irrespective of why an investment manager is used, here are some of the things they do.

  • Assist clients in establishing goals, future plans and uses of the investments and cash flow
  • Help in preparing an investment policy statement
  • Offers suggestions for the asset allocation and asset classes
  • Provides specific selections of investments
  • Executes the strategy
  • Makes the rebalancing decisions and its timing
  • Performs ongoing oversight, and review and monitoring of the investments and adherence to the plan
  • Reports regularly to their clients about the portfolio performance
  • Has a regular schedule for face-to-face and telephone meetings
  • Is continually available for calls and questions
  • Justifies their value to their clients on an ongoing basis to validate their charges

Using a professional provides the knowledge, experience and due diligence that individual investors might not have; certainly saves their clients the time that would be needed to be devoted to the portfolio; is available to explain the vagaries of the markets and how it relates to the client’s portfolio when there are downturns; can act and execute transactions impassionedly as compared to how a client would react to precipitous economic and political events; can save costs in executing certain transactions; and provides a buffer, sounding board and possibly a voice of reason to the mental reactions to the ups and downs that are a regular part of the markets.

Investment managers also adhere to plans and execution actions irrespective of whether the client is reachable or cannot act because of a vacation trip, physical or mental incapacity, personal problems or distractions demanding concentrated time away from other activities, or temporary inability to communicate or being able to carry out transactions timely.

When you use an investment manager, you are buying a service. For most people that use managers they more than not get their money’s worth and value for what they are paying. If you are not using a manager and believe that maybe you should, a suggestion is to interview multiple managers and have them justify using them and indicate the comfort and financial security they will provide to you. If you are using an investment manager, review some of my previous blogs about investment managers to see if you are getting what you should. You can search the archives of my blog or get a reprint of my previous blogs on this topic by emailing a request to emendlowitz@withum.com.

One Comment leave one →
  1. 6hawthorne permalink
    July 20, 2017 11:00 am

    Hi Ed  Good article BoB

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