How to Choose the Right Money Manager

Finding the Right Adviser for You

You’ve got financial goals, but you don’t necessarily have the time, interest or expertise to reach them on your own. Both your goals and the people you choose to help you reach them can have a profound effect on your financial future.

There’s no shortage of people who are ready, willing and (at least in their view) able to manage your money. Many of them advertise and probably call you, too. Your friends, colleagues and even your employer may recommend them. But deciding whether to manage your own investments or use the services of a professional is difficult.

Many investment professionals are honest, hardworking and competent, but others aren’t. There are crooks and incompetent money managers. They can be as persuasive—if not more so—than the honest, qualified ones.

How do you weed out the clearly bad ones and find the right one for you?

Finding the right money manager takes work. You must uncover and review a great deal of information, both about yourself and about the managers and firms you consider. There is no “easy” way, but there is a better way. Structuring your search will help keep you on track, keep you from feeling overwhelmed and give you the framework for making an intelligent, unemotional decision. And it should be one you’re comfortable with for decades.

Fisher Investments has developed this guide to lead you through the process. It’s a comprehensive, clear way to organize your thoughts and is designed to help demystify the process of choosing a money manager.

Self-Assessment

Before you can pick the right money manager, you need to understand your current personal and financial situation, lay out where you want to be in the future and think through your priorities for your assets. You also need to assess your own skills, abilities and priorities to determine whether to manage your own assets or not.

In total, this is a big, detailed job and you should expect to go much deeper into it with the money manager you finally select. But it’s necessary to have the broad outlines in place and be certain you need to go to a professional before you launch your search.

First, determine (or at least estimate) your current financial net worth and then target your future net worth. The following is a key formula to use:

If you’re not retired yet, you might consider your target future date; if you are, you might use your expected lifespan as a target future date. For instance, Exhibit 1 shows average life expectancies for Americans, based on current age.

Average life expectancies are published regularly, but they can only tell you so much. After all, an average is the middle, and you probably aren’t exactly “average.”

Average means there is a 50% chance you’ll live longer—maybe significantly—than the figure in the table! To get a better idea, consider your individual health circumstances, your parents’ and grandparents’ health history as it relates to longevity, and advances in health care technology. Reviewing where you are now and where you want to be will help you set reasonable goals. It will also help you pick a money manager, as you’ll most likely prefer working with someone who has experience with clients like yourself (see Question 2 in Part 3).

Exhibit 1: Average Life Expectancy*

Financial assets are investments that can be converted to cash fairly easily. This includes stocks, bank accounts, IRAs, rent-producing real estate (not homes) and other investments. It can also include expected future income, such as Social Security or pension payments, but it should not include personal property, such as cars, clothing or your residence.