Money Manager Report Card: How Did They Do?

When you are working with a money manager, you get the benefit of having someone else make your individual investment decisions for you. When you trust your money to someone else, you want to continually gauge their performance. Here are a few things to consider about how you can check on the performance of your money manager.


When you are working with a money manager, the only thing that matters is results. Your money manager might come very highly recommended and they might be working with many of your friends or family members. However, unless they can provide consistent results, you do not need to be working with them. You need to track your money manager's performance and look at the results periodically to determine if you need to stay with them or go with someone else.

Stated Goals

One of the first things that you are going to want to look at is whether or not the money manager met their stated goals. Typically, when you start working with a money manager, they are going to sit down with you and go over your investment objectives. They will also provide you with some goals that they are going to try to attain for you. It might be a specific rate of return or some other type of goal. When you are evaluating their performance, you want to go back and look at the goals that they gave you. If they have not met their goals, this is not going to reflect positively on their performance. If they cannot do what they say they can do, there is no reason for you to trust them.


When you are reviewing the performance of your money manager, you are also going to want to compare them to the competition. Many times, when a money manager tries to get you to work with them, they are going to compare themselves to the competition. They will try to tell you how much better they are than other money managers. Because of this superiority, they want you to sign up with them. As you are working with a money manager, you need to continue to compare them to the competition. You need to look at many different money managers that employ the same strategies as yours does. If your money manager is consistently outperforming the competition, then you are most likely in good hands. However, if they rarely beat the competition, you really do not have much of a reason to stick with them.


You might also compare your money manager's performance to a financial benchmark. A financial benchmark is an index of financial investments. For example, you could compare your money manager's performance to the performance of the S&P 500 over a given period of time. If your money manager cannot beat the market, you might be better off investing in an index fund instead of paying an individual to manage your money for you.

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