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How To Hire A Money Manager – What To Expect

Investing in the stock market is tricky to say the least and it’s getting trickier as time goes by. Heck, most major investment banking houses hire entire divisions full of mathematicians and theoretical physicists… theoretical physicists! How can I expect to handle my own finances and invest in the stock market with any degree of certainty when I’m going up against theoretical physicists and mathematicians?

One answer to this problem is to simply hire a money manager and if you have considerable assets, at least $250,000-$500,000 or more, then this may make sense for you. But most people don’t know what to expect when it comes to hiring a money manager and that is exactly what I’m going to talk about in this article today.

First of all, what exactly should you expect to have to pay a money manager? Usually they will charge you an annual fee that won’t be more than 1.5% of the value of your stock investments under their management. Most managers and financial advisers will also charge you a minimum fee of about $1,000 per year and that makes sense because there are simple administrative fees that will need to be covered such as printing reports and managing paperwork and paying secretaries to answer your phone calls to them etc.

The good news is that fees will usually be on a sliding scale that decreases as your investments increase. So the more money you invest the cheaper it becomes to pay your financial adviser.

What sort of services should you expect from your financial adviser? Well they will all differ but you can expect these basic services from most money managers. You should at least receive quarterly reports that explain how well your investments are doing. You should also expect to speak to your financial adviser at least once a year, and preferably once per quarter.

A financial adviser is not somebody that you call up and talk to often because many times these guys have 50 to 100 different clients and they just simply don’t have the time to speak to each of them on a daily or even weekly basis. Once or twice a year is normal and in fact that’s what you’ll need in order to discuss the new year and any changes that need to be made to your investment strategy or financial situation.

Also, when you first set up your account you can expect to meet with your adviser to set up a basic financial plan that is closely tailored to your needs. Most of advisers won’t create custom plans for each client because they have too many clients (unless you give them significant amounts of money like several million dollars), instead their firm will have created several financial plans that relate to several different broad categories of people and hopefully you’ll fall into one of those broad categories and they will simply use one of those template financial plans for you under most circumstances. You can expect to have this all explained to you during your initial meeting when you’re setting up your account.

Hopefully this article has helped shed some light on the mystery that is financial advisers and money managers. If your investment portfolio is large enough, then it often makes good sense to find yourself a financial adviser as soon as possible.

Written By Jason Markum

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