| Understanding the differences between
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| | people with limited investment
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| financial advisors, financial planners
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| | experience.
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| and investment managers can be
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| | So where can the average person turn for
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| challenging for the average person.
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| | sound thoughtful investment advice? I
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| Finding a suitable investment
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| | would highly recommend seeking an
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| professional is not easy. The number of
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| | independent investment manager with
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| different titles alone is enough to make
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| | considerable analytical and academic
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| your head spin. But in a nutshell, there
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| | experience. In addition to having
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| are basically three different types of
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| | substantial investment experience, an
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| investment professionals: financial
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| | investment manager should either have an
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| advisors, financial planners and
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| | advanced degree from a well-regarded
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| investment managers.
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| | school or be a CFA charterholder. You
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| Financial Advisors. These investment
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| | will, however, have to do your homework
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| professionals, also known as brokers,
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| | in order to find one of these managers
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| financial consultants, wealth managers
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| | willing to manage a smaller account.
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| and wealth advisors, are paid primarily
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| | What to Look For
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| to sell investment products and services.
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| | 1. Independent investment management
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| In other words, these professionals are
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| | firms. Money managers who are
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| primarily sales people and/or
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| | independent have fewer conflicts of
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| relationship managers. A relatively
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| | interest.
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| small percentage of these professionals
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| | 2. An investment manager with
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| have substantial analytical or academic
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| | considerable analytical and/or academic
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| investment experience. Hence, some
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| | experience. Managers should be CFA
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| financial advisors obtain an account and
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| | charterholders and/or have good academic
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| then outsource the investment management
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| | backgrounds.
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| function to another department within
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| | 3. Portfolio managers who are
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| their firms.
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| | accessible. Communication is very
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| Financial Planners. These investment
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| | important, especially when financial
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| professionals are also sometimes known as
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| | markets are volatile.
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| Certified Financial Planners, wealth
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| | 4. Small firms. At a small firm, you
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| managers and wealth advisors. Financial
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| | generally know who is managing your
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| planners are generalists who help clients
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| | money.
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| by providing advice regarding investment
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| | 5. Firms with conservative investment
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| management, retirement planning, tax
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| | approaches. Taking excess risk very
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| planning, estate planning and other
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| | often has a negative impact on your
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| areas. Some financial planners also
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| | portfolio.
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| outsource a substantial portion of their
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| | 6. Portfolio managers who are good
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| investment management and other
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| | listeners. Meetings with a manager are
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| responsibilities to other professionals.
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| | important only if the manager listens to
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| Some financial planners do not have very
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| | you.
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| strong investment backgrounds. In fact,
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| | 7. A portfolio manager should have
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| many financial planners come from other
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| | experience in both good and bad markets.
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| professions such as accounting, law and
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| | Down market experience is especially
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| sales.
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| | important, as mistakes can be very costly
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| Investment Managers. These investment
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| | during bad markets.
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| professionals, also known as money
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| | 8. Money managers who treat you with
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| managers, portfolio managers and
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| | respect. A manager should never make you
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| investment advisors, traditionally have
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| | feel like you are asking a stupid
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| extensive analytical and academic
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| | question.
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| experience. Investment managers often
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| | Who to Avoid
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| hold advanced degrees and may also be CFA
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| | 1. Most financial advisors, also
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| charterholders. Many investment managers
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| | sometimes known as brokers, financial
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| work as investment analysts during the
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| | consultants, wealth managers and wealth
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| early parts of their careers and then
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| | advisors.
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| advance to more managerial type roles.
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| | 2. Some financial planners. These
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| Investment managers are normally paid
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| | professionals sometimes come from other
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| primarily to invest money based on the
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| | professions and may have limited
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| investment objectives of their clients.
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| | analytical or academic investment
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| It is not easy to find a high quality
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| | training.
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| investment manager willing to manage
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| | 3. Most accountants offering investment
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| assets below $750,000. Today, some of
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| | services. Some accountants offer their
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| the larger money management companies are
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| | existing clients investment services
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| only willing to manage smaller accounts
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| | despite having somewhat limited
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| within a cookie cutter framework. Large
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| | investment experience.
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| firms sometimes place smaller accounts on
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| | 4. Any investment professional who
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| models and delegate some of the
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| | guarantees returns.
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| investment management responsibility to
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