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By: Adrian Mastracci
North Shore News
Business Section, “Loose Change”
Sunday, March 23, 2003
At some point, most investors seek professional
counsel. Usually about what to do with the
investment portfolio. Often, it’s coupled
with other matters.
Investor needs may range from a little advice
to the design, implementation and monitoring
of the total game plan.
One recurring question is how do investors
assess whether the professional’s perspective
in managing client wealth is appropriate for
them?
I maintain that the professional’s perspective
is vital for the client. Perhaps, the most
important consideration.
That perspective becomes the framework to
accumulate, protect, grow and transfer the
client’s wealth according to the client’s
requirements. Clearly, this has significant
implications.
Most notably, the professional’s perspective
on managing client wealth comes from experience.
Learning about the professional’s perspective
in view of what the client seeks is essential.
The professional’s web site can shed
some direction about perspective. Newsletters
may be available along with relevant topics
about which the professional has written or
been quoted.
Professional management of client wealth ought
to integrate the investment portfolio with
the appropriate planning for other matters
such as the estate, income tax, retirement
and perhaps the business. All into one plan
tailored for the client’s situation.
The professional’s advice ought to be
governed by what is important to the client
about financial security. The aim is to direct
client wealth with a thoughtful plan that endures
the test of time.
The professional’s perspective on managing
client wealth always places the client’s
best interests above all else.
Find a professional whose perspective on managing
client wealth encompasses these pillars. One
who:
- Concentrates on the personal rate of
return to attain the client’s financial
independence.
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Designs the portfolio to accommodate the client’s
financial independence aspirations.
- Identifies the risks the client
incurs.
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Considers the client’s long-term investment
time horizon.
- Determines the investment profile
appropriate for the client and stays within
it.
- Incorporates the principles of diversification
into the client portfolio.
- Focuses on asset mix as having the
greatest impact on the client portfolio.
- Seeks consistency of returns for
the portfolio.
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Minimizes the client’s exposure to
any individual investment.
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Formulates the client’s personal strategy
for handling gains and losses.
- Pays attention to the costs of purchasing,
holding and selling the investments.
- Captures the policies and strategies
the client will follow in a written plan
of action.
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Rebalances the client’s mix of assets
as necessary.
-
Accommodates the client’s changing
needs and priorities as required.
There are degrees of objectivity. The highest
is held by the professional who is not beholden
to any product or institution.
The method of compensation for the professional
is a consideration. It could be the fee-only
basis, or the combination of fee and commission,
or commission only.
The professional aspires to become the client’s
trusted source for the wealth management needs.
The professional’s goal ought to be for
the client to realize the personal objectives
and achieve peace of mind.
What is an appropriate fit? One is where the
client’s perspective on managing client
wealth concurs with the professional’s
perspective.
Choosing the professional’s perspective
wisely is a prudent and significant step.
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