Questions to Ask When Choosing a Portfolio Manager

1. How long has the advisor been in business? We would think a minimum of 15 years is reasonable, but most people in this profession don't qualify. Together we've been in the business more than 60 years.
   
   
2. How have their clients done in bad years like 2002 and 2008, Warren Buffett's worst year ever? It's relatively easy to make money when times are good like 2003 and 2009-10, but it’s much harder to hold on in difficult years.
   
   
3. What kind of credentials do they have? We both are MBAs from The Wharton School (Bill) and Queens University (Mary). Bill is also a CFA, Chartered Financial Analyst. The CFA certification is considered "The Gold Standard of Investment Management." Investment Operations Manager Cindi Bernart is also an MBA from Indiana University.
   
   
4. How does the advisor make money? We make it only from fees. A lot of advisors recommend mutual funds because the funds can pay them for putting clients in and keeping them there, plus the advisors themselves may collect a management fee. We think this is double-dipping and wouldn't put up with it.
   
   
5. 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. But on the other hand our exclusive America's Finest Cos., U.S. companies (with a minimum 10 straight years of higher dividends) have continually produced superior returns.
   
   
6. 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.
   
   
7. Do they "imply," "promise," or "guarantee" a certain return? If so, they're selling snake oil. We don't know of any return anywhere that's certain unless it's a U.S. Treasury bond held to maturity.
   
   
8. 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?
   
   
9. 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.