An organization or person who is focused in making investments in portfolio of security on behalf of their clients is called an investment manager. And all of this is done in line with the investment objectives and the parameters set by the clients. Such might be accountable as well for all the activities associated with proper management of the client’s portfolio from selling and buying securities daily to monitoring of portfolio, performance measurement, regulatory and client reporting as well as settlement of transactions.
The truth is, investment manager range in size from a couple of person offices to some big multidisciplinary companies with offices based in different countries. The fees for such are generally based on percentage of the client AUM or Assets Under Management.
So to give you a quick example, a person with a 5 million dollar portfolio that’s handled by investment manager who is charging 1.5 percent annually will pay 75,000 in fees.
Investors must have thorough understanding of different types of investment manager. CFPs or Certified Financial Planners normally develop a holistic financial plan for their investors which take info such as future cash needs, expense and income into consideration. Basically, it is a relatively broad term to use Financial Advisor or FA but this often refers to stockbrokers. Portfolio managers or PM are investing directly the capital of investors with one goal of providing high returns of investment.
Investors must determine what type of investment manager they need, which depends likely on what stage of financial planning procedure they are in. It is essential that you do a background check of professional regulatory qualification of the investment manager, review any complaints that were filed before and ensure that the manager has skills and experience required. It is important for investment managers to be contacted easily and take specific needs of their clients in mind. Due to the reason that financial needs are dynamic, investors must feel comfortable to reach out to their investment manager at short notice as this is the only possible way that service can be customized depending on their needs.
The performance of the investment manager must be evaluated and reviewed. In an effort to determine the performance of investment manager in different market environments, it is critical for the investors to assess at least 5 years of their investment returns. The fee structures must be considered as well when considering to hire such managers to handle your investments and other assets.
Needless to say, caution should be practiced at all time to avoid any troubles while working with an investment manager.