Question Leadership and Management of a Company Make Sure You Look Inside Yourself Before You Start Trading

Questions to Ask and Criteria to Use When Evaluating a Money Manager

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How do you evaluate a money manager? A. Personal interviews are absolutely essential. B. Do they eat their own cooking? C. Are all clients treated equally? D. Examine the investment philosophy. Is the manager still using the same philosophy that he or she has always used? E. Does advisor have constraining rules? F. Thoroughly analyze the past investment performance. How long a track record is there? Was it achieved in one or more market cycles? How did the clients do in falling markets? G. Have the returns been steady over time, or have they been volatile? H. Was the track record from a steady pace, or just a couple of successes? I. Were the investments in the underlying portfolio themselves particularly risky, such as shares of highly leveraged companies? Conversely, did the portfolio manager reduce risk via hedging, diversification and senior securities? J. Make sure you are personally compatible with the advisor. Make sure you are comfortable with the investment approach. K. After you hire the manager, monitor them on an ongoing basis. The issues that were addressed prior to hiring should be used after hiring.