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Why Use an Independent Investment Advisor?
Why Use an Independent Investment Advisor?
Investment advice requires the same individual focus as tax problems, legal issues, or medical attention. Investors are best served when recommendations are made solely on merit and suitability for you. In the crowded, contradictory world of investment advice there is one overriding element; all investment managers seek a substantial fee. Managers believe their approach is somehow unique and provide data to confirm it. As a result investing decisions are too often made on marketing.
After sifting through the enormous amounts of conflicting data in the investment market, an independent advisor can make recommendations without prejudice. An independent advisor provides a number of benefits as the following points illustrate:
- The best investment advisors are independent — without affiliations to banks, insurance firms, brokers and money managers.The benefit is that the client will get impartial, unbiased reporting and be able to draw comparisons to other investments similar to his own.
- A good independent consultant can compose and write a clear, concise Investment Policy Statement to guide all aspects of the fund. The fund benefits by the risk control and accountability of all service providers.
- Asset allocation information is provided for investment committee review and is the most important decision an investor makes. The benefit is that the fund will perform well over long time periods when this process is followed.
- Investment manager information is available on a systematized approach and historical manager records can be judged on merit. The benefit is that the fund hires investment expertise with as little politics as possible.
- Ongoing progress evaluation is provided and shows the fund's rate of return net of costs and ranks the fund results with similar funds to determine relative merit. The benefit is that the investment committee can make adjustments periodically to help results and recognize a performance problem in a timely manner — not after several years of under-performance.
- Investment management evaluation is a dynamic process and interaction
with fiduciaries on a timely basis can be very helpful and educational. The benefit for the fund is that opportunities are not lost for want of a credible source to discuss new developments in the markets that may or may not be right for the fund.
- Consider the cost of not hiring an independent investment advisor. The cost of lost opportunities can be considerable.
In sum, the benefits of having an impartial investment evaluator are several, but at the core of the concept is expert, experienced advice to the fudiciary without concern about conflicts of interest which occur with managers, banks, insurance firms, and brokers.
