An organization or person who is focused in making investments in portfolio of security on behalf of their clients is called an investment manager. This is all done in accordance with the investment objectives and parameters that are defined by clients. Such might be accountable for all the associated activities with proper management of the client’s portfolio from selling and buying securities on a daily basis to monitoring of portfolio, performance measurement, regulatory and client reporting as well as settlement of transactions.
As a matter of fact, investment manager range in size from 1 or 2 person offices to big multidisciplinary companies with offices in various countries. The fees for such are based generally 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.
The investors should have understanding of different kinds of investment manager. CFPs or Certified Financial Planners usually develop a holistic financial plan for investors which take info like 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. It is important for investment managers to be contacted easily and take specific needs of their clients in mind. Mainly because of the reason that financial needs are very dynamic, investors must be comfortable in regards to reaching out to their investment manager at short notice as this is the only way that they can have a customized service that meet their needs.
The performance of investment manager ought to 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.