We can’t make recommendations here.  Why would you pay a mutual fund manager.  If you can’t pick stocks for your own account, please exit the building.

[quote=vbrainy]We can’t make recommendations here.  Why would you pay a mutual fund manager.  If you can’t pick stocks for your own account, please exit the building.[/quote]

Wow newby pretty bold statements…

[quote=vbrainy]We can't make recommendations here.  Why would you pay a mutual fund manager.  If you can't pick stocks for your own account, please exit the building.[/quote]

Who says we can't pick stocks. First of all 100k is not enough money to make a decent diversified stock portfolio.  In this hypothetical situation, I wouldn't have the time or inclination to stock jockey my own account for the most part.  I would rather rely on the expertise of a good fund manager for the larger part and then invest in some Indexed EFTs and close end funds. 

I find it amazing that such a high percentage of posters on this forum are consistently able to pick their own stocks and beat the indexes.

If you're all such good stock pickers, then why aren't you all runnng your own fund...I mean, that's where the real money is?!!  What on earth are you doing servicing a measly $100 million or so in client assets, anyway?!!!

I personally have a small non-retirement stock-picking account to satisfy my own yearning to research and trade.  Sometimes, I do very well, and sometimes I lay an egg.  Overall, I make respectable returns, but on average, I don't perform in the top 10% of professional fund managers for a given asset class.

I'm not too proud to admit that a professional fund manager, with three dozen CFA analysts flying around the world, interviewing company management, competitors and suppliers, and picking apart the company's financials, can usually over time, outperform my own personal picks.  THAT is why I am willing to pay for and use professional managers for my serious money.

I'm not saying that it's not possible to beat a fund manager that dedicates 100% of his working hours to stock selection, and has many very intelligent people on staff to assist in the process, but it takes a rare person with special skill to accomplish this.  I'm willing to bet that there are very few professionals posting on these boards that do this in reality, despite all the chest-thumping we see in various posts here.  I'm sorry, but I don't believe most of you.  Rightway could possibly be an exception, but even there, I'm not sure about that.  Rightway may manage his own portfolios as much for tax effiency as superior performance.  One of the surest signs of maturity and success in this business is to be able to admit those areas where you are not the best and to hire professionals to assist you in providing your clients with superior service and returns.

I spend my time doing what I consider myself to be really good at...working with my clients to help them make intelligent financial decisions, monitoring their investment portfolios, choosing professional money managers, deciding how much client money to recommend allocating to each manager, and deciding whether or not to recommend retaining the manager and/or when to fire them for substandard performance.  Occasionally for fun, I help clients pick stocks, but generally with 10% or less of their investable dollars.

A wise person knows his/her weaknesses and acts accordingly.

Indyone



Nice post, I agree. It is so hard to be a professional fund manager.
The hours involved are worse then a new broker. This is coming from
someone who loves stocks, but having said that there is nothing like a
great mutual fund. I usually have most of my money in a fund then maybe
one or two stocks that I really like.

It is absolutely amazing.  Here we have about 20 people claiming to be big time producers and only 3 people can even begin to formulate a decent answer.

I want to see what you people really know.. 

I would keep it all in cash and sell puts on the 500, if it were my money.

Ace

I always optimize a client's money, based on risk tolerance.  I prefer to use a diversified equity portfolio that has at least 15% in international stocks and real estate, with no bonds. 

Volatility be damned, it gives the portfolio the best chance of lasting the longest, regardless of drawdown rate.

Ace

[quote=Indyone]

I find it amazing that such a high percentage of posters on this forum are consistently able to pick their own stocks and beat the indexes.

If you're all such good stock pickers, then why aren't you all runnng your own fund...I mean, that's where the real money is?!!  What on earth are you doing servicing a measly $100 million or so in client assets, anyway?!!!

I personally have a small non-retirement stock-picking account to satisfy my own yearning to research and trade.  Sometimes, I do very well, and sometimes I lay an egg.  Overall, I make respectable returns, but on average, I don't perform in the top 10% of professional fund managers for a given asset class.

I'm not too proud to admit that a professional fund manager, with three dozen CFA analysts flying around the world, interviewing company management, competitors and suppliers, and picking apart the company's financials, can usually over time, outperform my own personal picks.  THAT is why I am willing to pay for and use professional managers for my serious money.

I'm not saying that it's not possible to beat a fund manager that dedicates 100% of his working hours to stock selection, and has many very intelligent people on staff to assist in the process, but it takes a rare person with special skill to accomplish this.  I'm willing to bet that there are very few professionals posting on these boards that do this in reality, despite all the chest-thumping we see in various posts here.  I'm sorry, but I don't believe most of you.  Rightway could possibly be an exception, but even there, I'm not sure about that.  Rightway may manage his own portfolios as much for tax effiency as superior performance.  One of the surest signs of maturity and success in this business is to be able to admit those areas where you are not the best and to hire professionals to assist you in providing your clients with superior service and returns.

I spend my time doing what I consider myself to be really good at...working with my clients to help them make intelligent financial decisions, monitoring their investment portfolios, choosing professional money managers, deciding how much client money to recommend allocating to each manager, and deciding whether or not to recommend retaining the manager and/or when to fire them for substandard performance.  Occasionally for fun, I help clients pick stocks, but generally with 10% or less of their investable dollars.

A wise person knows his/her weaknesses and acts accordingly.

[quote=babbling looney]

I would rather rely on the expertise of a good fund manager for the larger part and then invest in some Indexed EFTs and close end funds. 

$100,000 huh?

Flight to Las Vegas- $150

I would place a $99,850 bet on black at the nearest roulette wheel.

Just kidding.

I would invest in real estate overseas.

I diagree with the posts about running our own portfolios.  THis
is a wonderful way to make more money for everyone and differentiate
myself.  “Why not be a fund manager?”  I am a fund manager
but with more benefits: I have  several strategies (or “funds”)
than I run for our clients and clients of a few other FA’s
clients.  I run them on an institutional platform with block
trading etc.  The performance is typically 3 to 10 bp’s over the
broad index they track, with much more customization.  I attract
FAR FAR FAR more assets by marketing our boutique approach to managing
a portion of assets. Last time I checked I did not deliver a year end
capital gain distribution up the butt of a client that has not made any
money in my portfolios.



I also get to hire out managers for a portion of the assets I
attract.  I also get invited to weddings.  I also get to take
widows to dinner with 10 of their friends and have my firm pay for
it.  I also get to send client’s kids to college, and then watch
them get maried, have kids, and start up college funds for those
kids. 



Frankly the fact that the majority of the posts support idea of NOT
running customized portfolios is a symbol of my growth.  Guess
what?  Many big clients want customization, and with my team they
get it, with yours they do not.      

Oops:  performance is 3 to 10 %, not bp’s

RW, we'll have to agree to disagree on this.  You're speaking on a forum where the vast majority of us do not have the time or resources to do what you are doing.  I also happen to live in a geographical area where multi-millionaires are a rare breed.  I just ran my book yesterday and of the $30 mil I have under management, 33 client households make up $22 million of that number.  My largest client has $2.5 million with me and I can think of only two individuals I've worked with that have larger investment portfolios.  One now works with a local friend of the family advisor with a portfolio of SMA's and the other one I share with a Jones advisor.  In the entire local market, I can say with some assurance that there are less than 25 individuals with a net worth in excess of $5 million and at least half of those are farmers with the vast majority of their net worth tied up in land.  Frankly, I think you'd starve using your strategy in my market.  Investors are just not that sophisticated or that wealthy in these parts.

At the same time, I make a good living and am very satisfied doing it this way.  I have no real desire to make the majors, living in NYC and working with the elite.  You are more like champaign and caviar while I am a hamburger and fries (although not an Edward Jones hamburger).  You're not wrong, but you're speaking a successful recipe for a decided minority on this forum, I'm afraid.

...and no offense, while I think you are a very fine (and out of my league) advisor, it would not at all surprise me to learn that your peer performance numbers were a bit stretched...I've seen (and used) Wall Street firm research and it's not that good...

On the other hand, I met with a client this morning to review performance and their 70/28/2 stock/bond/cash portfolio beat the S&P 500 and Russell 3000 indexes by 1.85% and 1.57%, respectively.  That's pretty typical for my clients, although we occasionally knock the cover off the ball for some.

You cover your niche and I'll cover mine...and rarely will the two cross...it's a happy world...

Constructive dialogue such as above between these two members (and a couple others) is why I visit this site.

Fair enough.  But I have to take a major apposing view here.  I like hamburgers and fries.



The crux of my post is that just about everyone has the same business
model:  Funds, Annuities, UITs’s under a brokerage
arrangement.  I found that by offering discretionary management
(and not just stock portfolios) I set myself apart, and that was a
serious engine for the growth I was fortunate enought to
experience. 

RW–you may have answered this before, but how far along (AUM, LOS, etc)

were you/your team before you were willing and able to set up the system

you use now. It appeals to me as well–with a bent towards using ETFs as

the primary vehicle. Just curious what was critical mass for you and how you

dealt with the part of your cient base that didn’t want to change or you

didn’t want them on board.

I had about 7 years in the business when I moved away from commision
business.  I was doing over a million in production, but went down
to 240K my first year going fee based.  I did not give the new
clients a choice, it is simply all I offered.  As for the existing
folks that had already paid commissions, I had to migrate them over
time, using the performance of my fee based portfolios against their
accounts as an attractive point.  They all converted.  I
broomed all small relationships so I was only working with about 60
households and about 40 mil AUM.  I automated my investment
process through equity screening, multi-diciplined managed money
platforms, automated perfromance reviews, and an organized office
system.  Then my assets grew, I went into managing the money
myself (I use ETF’s in that mix), and things exploded.  In the 4
years since 2002 my business has went up almost 10x.  I began
attracting much much larger clients via referrals and then built a team
so I didn’t have to be out of the office as much.  

[quote=blarmston]Constructive dialogue such as above between these two members (and a couple others) is why I visit this site.[/quote]

I enjoy this too...there's a lot that can be learned here if you can weed through some of the junk.  I can't remember for sure how long you've been in the biz, but if memory serves me right, you're under 30.  If that's the case, your posts show signs that you have some great mentors in your office and I'm confident that you'll remain among the 10%...keep it up.

RW, glad to hear you like hamburgers...even if you didn't, you still have my respect.  My fee-based is about 50% of my book and my goal is to eventually have that part make up about 85% of my book.  Our business models may not be the same, but I'm still glad to swap ideas from time to time.

As a newbie, I’d hire a marketing assistant who’s only job would be to keep me so busy I couldn’t breathe.