WHAT QUESTIONS SHOULD I ASK IN EVALUATING AN INVESTMENT ADVISOR?
Following are some of the questions to analyze the effectiveness of various counseling organizations:
- When did the company first begin investment management operations?
- To what extent is outside research used?
- What management style do you use? Why?
- Are fundamental factors considered to be more important than technical factors in making portfolio decisions?
- How is technical research used in the decision-making process?
- What criteria must be met by a stock to qualify for inclusion in a portfolio?
- How are sell decisions made?
- Do final decisions rest with key individuals or with a key committee?
- How are computers used in the decision-making process?
- What information can you provide to me regarding your effectiveness in managing portfolios similar in size and objective to mine?
- What is the management fee schedule?
- Are fully discretionary accounts handled?
- In an advisory account, to which extent does the investor participate in decisions or portfolio transactions?
- What is the average numbers of accounts handled by a portfolio manager?
- Which type of portfolio is this company best prepared to handle?
- How often are individual portfolios valued and the performance figures calculated?
- Would the performance of one account be representative of all of the accounts with the same objectives?
- What standards are account performance measured against?
- How often does a client receive a status report of his accounts?
- How does this company feel it can best try to protect its clients from losses in a down market?