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 based generally on percentage of the client AUM or Assets Under Management.
So to give you an example, someone who has a 5 million dollar portfolio being handled by investment manager who charges 1.5 percent yearly will have to pay 75,000 in fees.
Investors must have thorough understanding of different types of investment manager. Certified Financial Planners or simply CFPs are creating holistic financial plan for investors which take information similar to future cash needs, expense and income into consideration. FA or a Financial Advisor is a broad term to use actually however, this mostly refers to stockbrokers. Portfolio managers or PM are directly investing the investor’s capital with the goal of providing high returns of investment.
Investors have to determine what kind of investment manager they need, which likely depends on what stage of financial planning procedure they are currently in. It is critical that you perform a background check of professional regulatory qualification of investment manager, review for complaints that were filed before and make sure that the manager has the experience and skills required is something that investors have to do. Investment managers should be easy to contact to and taking specific needs of their clients into account. 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 investment manager ought to be evaluated and reviewed. It’s critical for investors to evaluate at least 5 years of investment returns in order to determine the performance of investment manager in different market environments. The fee structures must be considered as well when considering to hire such managers to handle your investments and other assets.
While working with an investment manager, caution must be exercised at all time.