Stableford Capital Insights

10 Asset Management Questions to Ask Before You Hire an Investment Firm

Hiring an asset management firm to have a hand in protecting and growing your wealth can be an arduous undertaking. You want a firm that will grow with you and your wealth, that has the resources to look holistically at your financial future, and will partner with you to build your legacy. Choose wrong and that could mean the difference between hundreds of thousands of dollars over the relationship with the firm. Even millions for high net worth individuals.

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The truth is, there’s no right choice. Only the firm and advisor that are right for you. To help you narrow in on who to hire, follow these 10 questions to ask yourself and as you interview a firm.

The Advisor Repertoire

Are you comfortable with the advisor and firm?

Seems simple, but this person will have access to the assets you have spent years, possibly decades, accumulating. And you will be spending a fair amount of time on the phone and sitting across from this person. If you don’t click, or you feel like the person doesn’t understand you and your needs, save yourself the frustration and move on.

What is the advisor’s experience?

What kind of assets has the advisor or firm managed, and for how long? Certified financial planning is one area that you don’t want to take a chance on a new grad. Mistakes are inevitably made by rookies and you don’t want them learning on your dime.It’s okay (encouraged, even) to ask for years of experience and where, as well as what mistakes that advisor has made and learned from.To be clear, the advisor’s alma matter doesn’t matter as much as experience working with high net worth clients and the amount of assets managed.

Is the advisor showing an interest in your specific situation and asking YOU questions?
Woman Financial Advisor speaking about Asset Management with clients - Stableford_web

It can’t be a one-way relationship. Make sure the advisor is showing a genuine interest in learning about you, both your current and ideal financial situations. And this includes whoever makes up your asset management plan – partner, kids, grandkids, etc. Are there signs of active listening? Good questions being asked?If the advisor is trying to put you in a category or “bucket,” he or she is probably not experienced enough to be flexible as your situation inevitably changes.

Is the firm or advisor a fiduciary?

Probably the easiest question. If the answer is no, move on. Only a fiduciary is legally bound to provide you the best care possible, and in financial terms, that means always act in your best interests.

What You Need in Asset Management

Are you confident in the advisor’s approach to asset management?
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Once you “like” an advisor, move on to their approach to asset management and make sure you have confidence in how he or she will treat your money. This includes communication. How often will you hear from the advisor? What is the best method to reach him or her, and when can you expect answers to your questions?

Is there a minimum asset requirement?

This is especially true for high and ultra-high net worth individuals. You are looking for a firm or wealth manager that manages assets like yours. You don’t want to be the only millionaire on your advisor’s client list.Likewise, you don’t want to be the one pulling the average asset number down, either. You need an advisor that understands your current position and has experience managing assets at your level, no matter what that is.

What stage are you in?

Unless you’ve just come into a large amount of gifted assets, you’re likely in the accumulation stage, especially if you are hiring an asset manager. So your financial planning now as you accumulate and grow your wealth is different than when you plan to use your assets. Knowing what stage you are in will help an advisor assess your risk and manage your assets.

How the Firm’s Investment Philosophy Benefits You

What is the firm’s philosophy on active and passive asset management?
Balancing asset management and portfolio risk on a scale comparing dollars to risk - Stableford_web

The difference between active and passive asset management can differ from firm to firm, so this is important to determine upfront. For Stableford, active management translates into putting constant attention on each client’s portfolio construction, ensuring tactical allocation that can lead to better risk-adjusted returns.Although passive funds can outperform active managers in an atypical market, an active manager who can separate the bad companies from the good, and who is eager to venture from the index, is then in a prime position to outperform. This means potentially healthier returns for clients.

How often will your financial plan be reviewed and updated?

This is a follow-up to the previous question about active and passive management. Passive management traditionally means less review, while active management means constant review. Your financial plan should be reviewed annually at the very least, more during market activity or life events.

How long do clients stay with the investment firm?

This can clue you into how well the firm performs in a variety of market situations. Ideally, relationships last years (sometimes decades) – not months. A longer average relationship length can also indicate how well the firm provides peace of mind to clients.

Ignore the Market and Focus on YOUR Asset Management Goals

Stock Market Risk Adjustment for Asset Management Services - Stableford_web

Trends come and go – a solid investment philosophy will benefit you and your asset management goals for the long-term. An agile investment firm understands this, and your unique goals, and creates a custom roadmap to get you there.When the market hits a volatile valley, risk-adjusted returns are key. Stableford’s unique investment philosophy actually focuses on the downside first, then the potential appreciation second.This has allowed clients to continue to earn returns even in tough times, such as the COVID-19 pandemic and associated economic fallout. Knowing your assets are being managed by an investment firm that aims to protect them also lends to peace of mind. To learn more about Stableford’s different approach to asset management, contact us or call 480.493.2300.

Justin Thomas
Justin C. Thomas has worked for over 15 years as a portfolio manager and analyst managing institutional assets for hedge funds and large financial institutions. Career highlights include 8 years as an equity analyst and portfolio manager at PartnerRe Asset Management, a global reinsurance company with $17 billion in assets under management, and prior to that managing a long-short equity portfolio for Citigroup’s proprietary account. Justin has also worked as an analyst at long-short hedge funds and in research for Montgomery Securities (Bank of America Securities). In addition, Justin Thomas gained operational experience while working in finance and operations at E-Stamp, a start-up in Silicon Valley. He began his career working as a CPA at KPMG. Justin has an MBA and Masters in Accounting from Northeastern University and an undergraduate degree in Economics from Tufts University.