Evaluating A Money Manager

Scams and frauds are designed to take your money through false promises and phony claims. Money management is supposedly designed to increase your net worth. Sometimes these two worlds meet and the results are not in your favor, i.e., you have a considerable decrease in net worth.

The information in this article won't keep future money managers honest but it will help you find the one who is right for your situation. There are four criteria you must consider before you give your money to anyone to manage.

1) Philosophy-- This is the thought theology used by the money manager to make your money grow. In other words, does (s)he focus on stocks, options, mutual funds, annuities, a blend of investment vehicles, etc.? Does this philosophy coincide with your risk tolerance? If stocks are too risky, a manager concentrating in that arena isn't for you. The philosophy also points you to their performance.

2) Performance-- We all know the markets are not stagnant. They go up, they go down. No investment manager can predict the market with absolute certainty. But, they should perform well, or even above average, in their specialty. For example, a stock focused money manager in today's market environment should have performance numbers that would make even Warren Buffet take notice. You want as long a performance record as possbile. To be fair, one market cycle should give you a decent indication of the manager's performance in his/her area(s) of expertise.

3) Process-- This is the means the manager uses to select securities for the portfolios. For example, does (s)he rely
only on in house research or does (s)he incorporate research
from outside sources? If so, who are they and on what frequency are they used?

4) Personnel-- Besides wanting to know the manager's experience, you'd be wise to learn all you could about the folks working in the office. Who actually manages the portfolio? His/her experience? How long has (s)he been in business? Who will manage your account when (s)he is out of the office, on vacation, on business?

Some people would say cost is one of the criteria. I say it is, but to a lesser degree. In over 30 years in this business, I can guarantee that paying the highest commission did not necessarily result in receiving the best advice. Paying the lowest commission did not necessarily result in receiving the worst advice.

Cost comes in the form of fees and commissions. ALL money managers charge. Cost, initially, should not be in your criteria because it often becomes the ONLY determining factor. That will skewer your thinking and could result in not having a
winning team working for you. Make the above four parameters your
primary criteria and cost will take care of itself.

How? You will be quoted a charge. If you are not comfortable with that price, negotiate. All fees and commissions are negotiable. If the manager refuses to negotiate, then and only then, make cost a member of the criteria team.

This article won't solve all of the money management problems or costs associated therewith. However, it'll at least start you thinking in the right direction and keep
your money in your pocket until you are ready to hand it over.

2004 (c) This article may not be reprinted without permission of the author who can be reached at tom-koziol@excite.com

GUARANTEED! Turn your paycheck into a cash flow geyser. Cashclique.com Dollar$ign Newsletter provides proven paycheck stretching money management tips, tools, techniques and strategies to increase your personal cash flow. This is YOUR fail safe money management program. FREE subscription at http://www.cashclique.com/page4.htm

---

Finding False Gold in Penny Stock

As far as traders go, many do not see the... Read More

Commodities - The Next Big Wave of Fortune Building

Have you often wished you could have got in on... Read More

How to Buy to Let

Find out everything you need to know about buy to... Read More

Rules of Simple IRA Your Business Needs to Know

A Savings Incentive Match Plan for Employees plan, better known... Read More

Types of Investment

The word 'investments' is one that most of us are... Read More

How Eating Bitumen Made Me a Better Stock Trader

Stock market trading is a fascinating activity.There are so many... Read More

Protecting the Tax Advantage of Your Deferred Compensation

The American Jobs Creation Act of 2004 imposed strict new... Read More

Mutual Fund Returns May Not Be As They Seem!

Arthur Levitt, during his tenure at the SEC, experienced many... Read More

Why have Investment Plans for the Stock Market

If you do not have an investment plan in the... Read More

Out-Of-State Investors Check List of Questions

The following lists of questions are suggested questions to ask... Read More

How To Create Wealth In The Stock Market

First and foremost, an opportunistic strategy for creating wealth in... Read More

The Three Legged Stool

My paternal grandparents were born near Lake Como, Italy. My... Read More

Stocks: Reduce Risk Yet Maximize Profits

It is important to note that every smart investor wants... Read More

Stocks, Oil, and Bonds

A barrel of oil bounced to over $60 Thu, which... Read More

Finding the Perfect Company

The perfect company - it's the holy grail of the... Read More

What Age Should I Start Saving For Retirement?

Ask this question to 100 people and you will receive... Read More

Options Made Easy and Investor Education - Simple Enough for a 10 yr Old Kid

How many of you out there think that the market... Read More

Investing Psychology Today Requires All Traders to Awaken Their Speculator Minds

Stock trading strategies are as rampant today, as they were... Read More

Credit Scores = ROI Profits for Real Estate Investors

Strong credit saves real estate investors money on mortgage finance... Read More

Bankers in Denial

Denial is a ubiquitous psychological defense mechanism. It involves the... Read More

Rolling your 401k: Contributory IRA vs. Rollover IRA

In an ideal world you would start your working career... Read More

Seven Investment Terms Everyone Should Know

For those who have never given their financial future a... Read More

Coca-Cola - A Value Stock?

There has been much talk lately about Coca-Cola and its... Read More

Asset Allocation Lessons: The 70% Inflation Solution

For investors only... and for speculators who need to invest... Read More

Lobster Trapping for Investment Ideas

Recently, my family and I took a trip to Maine... Read More

Getting Started Investing is Often the Hardest Part

There are several reasons people give for not investing their... Read More

In a Time of Need

As I take my leisurely walk with my dog through... Read More

To Retire Rich, Save and Invest Early

If you want to retire rich, start saving investing early.... Read More

Investing in New Zealand - Learn how to Find Unique Investment Opportunities

Investing in New Zealand might be much easier than investing... Read More

When Its Too Late to Save for Retirement

You are 55 years old (or somewhere around there) and... Read More

Direcway & Wildblue Set to Square Off this Fall?

There is a cat fight brewing between Direcway LLC, Starband... Read More

Straddle Strategies in Option Trading

The straddle strategy is an option strategy that's based on... Read More

The Key Ingredient To Increase Preconstruction Profits By Over $20,000

One of the greatest preconstruction investing issues that I hear... Read More