Many people deliberate long and hard when choosing the company best suited to manage their savings. Portfolio manager data (i.e. manager performance) is kept confidential and each individually tailored portfolio is likely to produce different results. So you cannot decide which manager to choose on the basis of returns. And in any case, past results may not necessarily be repeated in the future.
So, rather than relying solely on a manager's performance to date you need to look at criteria that will give you a pretty good idea of how successful that manager will be in managing your investments.
Honesty and integrity. Letting someone else looking after the money you've worked hard to earn over many years is no trivial matter. The power of attorney you give over your portfolio can, of course, be revoked at any time but the engagement of a portfolio manager to look after your assets is meant to be a long - term one. So the company and investment professionals to whom you entrust your savings need to be honest, reliable, and totally ethical in the way they do business.
Track record and experience. Check out the manager's financial robustness and its track record in portfolio management. Find out what you can about the personal track record of its investment professionals as well. Stability and consistency are important factors to consider here. Find out, if possible, how long the company's current investment team has been working together. Does the company run a high – powered business driven by massive advertising, aggressive pricing, mergers and acquisitions and breakneck expansion, or does it focus on the long – term, building its reputation on growth generated by loyal clients bringing in more clients after them? If you've been sufficiently impressed by a manager's capabilities to enter into an agreement with them, it is their capacity for stability and consistency that will ensure they achieve superior returns from your portfolio over the years.
Personal relationship and management of expectations. Getting the results you hope for from your portfolio depends to a large extent on the communication between you and your fund manager. So the company you choose should be one whose advisors inspire confidence at your initial meeting with them. It is equally important that your manager is in no doubt as to your objectives and your expectations of your portfolio. If a company promises the earth and its advisors only tell what you want to hear, be skeptical and think twice before entering into an agreement with them. It is important to have a discovery process that is thorough and addresses your attitude to risk, personal conditions and your savings as a whole.
Professionalism and creativity are no less important than economies of scale. Portfolio management is a task that requires expertise, professionalism, creativity, team work and considerable resources. It is a process backed by stringent risk management, internal auditing, compliance rules and sector regulation. These are all resources that you will only find at some of the largest investment houses. It does not mean, however, that you have to compromise when it comes to personal service. If an investment house is too big for you, or the management team there is constantly changing, you should reconsider whether this is the right company to look after your savings.
Costs. You will obviously need to make sure that you are fully informed about the costs of managing your portfolio. These will usually include depositary fees, commission, and management fees charged by funds and other financial products that the manager buys on your behalf. But cost is not the sole criterion here, nor is it the most important of all. Uncertainty about a manager's reliability or experience, a lack of communication with advisors and an extremely brief discovery process – these are all factors that do not bode well for the long term and can cause untold personal distress. The resulting losses could add up to far more than the amount you might have saved in management fees