Stocks, bonds, mutual funds, exchange traded funds, separate accounts, private equity or hedge funds? Active or passive? Fees or commissions? Sifting through all the information in the marketplace, and determining how best to support your investment goals can be extremely complicated.
As a result, for many individuals of wealth, retaining the services of a financial advisor makes sense. Of course, when an individual decides to seek outside support to manage their investments, they will face an abundance of choices among firms, services, and advisor compensation structures as well.
There are many aspects of service to consider when selecting an investment manager, but in our experience, we have found these components to be the most important: a goal-based investment management process; independent and unbiased counsel; and an experienced, accessible team. A critical component of the support you receive from your investment-management team is their process. The investment manager should have an established, methodical process in place to provide continual, goal-based support for the client. For example, at Waldron, our process is to first, take the time to understand your investment objectives and the level of risk you are comfortable with. Second, we learn your cash flow needs and time horizon, and incorporate that information into your long-term strategic allocation. Then, once we’ve constructed your portfolio, our team monitors and makes tactical adjustments to the allocation as needed, to ensure that your established goals are being supported.
Another key to goal-based investment management is independent and unbiased counsel. A simple way to determine if a potential advisor is independent, is to ask if they are a fiduciary. Fiduciaries are unencumbered by conflicts of interest, and operate exclusively in support of the client’s goals. Your investment manager should act as such, and design your portfolio (or portfolios) specifically to meet your goals and financial needs, without any other influences impacting the portfolio design. Whether the task is asset allocation or an implementation decision, an independent investment advisor will have a full range of options at his or her disposal, and will be unencumbered by conflicts of interest when they evaluate them. Conversely, an investment manager working for an institution that offers proprietary investment vehicles may be motivated by incentives to steer clients towards their own, more profitable products.
Of equal importance is the investment management team that will be serving you. At Waldron, we create a customized team for each client, including a wealth counselor, an investment manager and a wealth planner, with each team member selected specifically for having the experience and skillset best suited to serve that client’s unique needs. We also maintain a client-to-staff ratio no higher than 5:1, so that we can provide concierge, high-touch service to every client we work with. In short, when hiring an investment manager, you should be confident that they will be actively supporting your goals, and that your experienced, dedicated team will be accessible when you need them.
