Choosing a Portfolio Manager
Frequently Asked Questions
How long has the advisor been in business?
We would think a minimum of 20 years is reasonable, but most people in this profession don’t qualify. Together we’ve been in the business more than 50 years.
How have their clients done in bad years like 2002 and 2008, Warren’s Buffett’s worst year ever?
It’s relatively easy to make money when times are good like 2003-2005 and 2009-13, but it’s much harder to hold on in difficult years.
What kind of credentials do they have?
We both are MBAs: Bill from The Wharton School and Mary from Queens University. Bill is also a Chartered Financial Analyst (CFA). The CFA certification is considered “The Gold Standard of Investment Management.”
How does the advisor make money?
1) We are a fee-only Registered Investment Adviser (RIA). 2) We only charge a fee on the assets we manage in your stock portfolio accounts. 3) Many advisers recommend mutual funds because the funds can pay them for putting clients in and keeping them there, plus the advisers themselves may collect a management fee. We think this is double-dipping and do not practice it.
Does the advisor mostly or exclusively use mutual funds?
If they do, stay away. We don’t have any mutual funds of any type in any portfolio. Why? Because they have a long long history of mediocrity, not to mention in many cases outrageous expense charges. We focus on our exclusive America’s Finest Companies® compilation (U.S.-based companies with a minimum 10 straight years of higher dividends) that produced superior returns in the past.
Are they trying to beat the market every single year?
If so, they’ve carved out an impossible task. We think it’s far more important to focus first on preserving principal.
Do they “imply,” “promise,” or “guarantee” a certain return?
If so, we don’t know of any return anywhere that’s certain unless it’s a U.S. Treasury bond held to maturity.
Do you trust the people you’re dealing with?
Do they get to know you thoroughly and understand your wants, your needs, and as importantly, your concerns? Do they communicate regularly?
Have they ever been convicted of any securities violation, especially with regulators like the SEC or the state(s) in which they’re registered?
We have not.