Hi, I’m Doug Goldstein of Profile Investment Services.
One of the questions that people ask me a lot is “Who watches my portfolio for me?”
They say something like, “Doug, do you watch my account?”
and I explain to them something which is very, very important and I’d like to explain to
you right now the difference between a money manager and investment advisor.
It’s a critical difference and the relationship you have with your investment advisor or money
manager is going to be dependent on your understanding what this is.
So an investment advisor, by the way which is what I do, is someone who gets to know
who you are.
I spend a lot of time talking to my clients about their needs and their goals, tolerance
for risk.
Investment advisor is going to help you to design a portfolio and make recommendations
and answer any questions that you have and we’ll probably execute the trade that you
order but you have to hear what I’m saying is that you make the orders.
Ultimately, you’re the one responsible to look at your portfolio.
What does that mean?
It doesn’t mean that the advisor sits if he wants and then goes away.
I’m available to talk to clients but I’m not in a position that every morning I can
come in and say “Let me see how Mr. Jones’ stocks are doing” and “How about Mr. Smith’s
stocks, how are they doing?”
That’s what a money manager does and I’m going to talk more about that in a minute.
I try to design portfolios for clients that depending on how involved they want to be,
that’s how the portfolio will be set up.
If they want to be very involved and they want to have more activity and they want to
speak to me more so maybe they’ll have things that are perhaps more aggressive or require
more hands on.
But clients like that, they need to understand what they’re doing, otherwise, they’re
just kind of running around in circles or shooting blind.
As an advisor, my job is to advice.
Your job is to watch your monthly statements and depending on the type of account, maybe
even look online more often than that.
A money manager – money managers are companies normally and they handle portfolios for institutions
or for individuals and they have a team of people who don’t really work on a day to
day basis with clients like I do.
As money managers, they do their research or they’re meeting with companies, they’re
making trading decisions on a discretionary basis which means they don’t call the client
and say “Hey Bobby I think you should buy this or sell that.”
It’s not like that, it’s not like in the movies.
They’re professionals who manage portfolios.
If you want someone watching your portfolio on an everyday basis, you should put your
money with the money manager or maybe inside of a mutual fund where there are managers
who are making day to day decisions but you still have to back up and look at the bigger
picture.
It’s your job and often with the help of your financial advisor, your job ultimately
to look at your accounts, determine whether you’re comfortable with what’s going on,
ask any questions that you might have to your advisor, he’s there to help you, to help
you to make decisions but ultimately, the decisions are up to you.
If these drive you crazy, you want to give it all over to someone else, sorry that’s
not the way the system works.
The types of people who give everything over to someone else, we call them beneficiaries
of trust.
There are situations where there is a trustee and you put all of your money into a special
type of an account, it’s managed by a trust or a trust company, they make all of the decisions
based on the parameters that you’ve set out and not only do they make the decisions
but they’re responsible for overseeing what’s going on.
Although in my office, we handle lots of trust, mostly what we deal with are individuals who
have brokerage accounts or IRA accounts or some type of savings or long-term investment
account and they want someone to help them get it set up the right way.
They may assign a money manager and we help them do that.
The money manager who handles the day to day operations and we train the clients how to
look at their monthly statements and we’re there to help them along the way but at the
end of the day, it’s your money, your account and you’ve got to keep an eye on it.