Money Manager

by Jay Wertzler —

Best-in-Class Criteria

  • Has managed both equities and fixed-income assets for more than 10 years
  • Manages at least several hundreds of millions of dollars in assets
  • Three or more other financial professionals or peers assure you that many of their clients have successfully achieved or exceeded their targets over long periods (5+ years) utilizing this manager's strategies
  • Demonstrated record

 

Common credentials or certifications

  • Chartered Financial Analyst (CFA)
  • Federal and or State registration
  • University degree in finance / securities analysis / investment management (post-graduate degree preferred)

 

Routine Activities

  • Asset Allocation
    • Recommend a general allocation for each client which is suitable and aligns with the financial planning projections (equities v. fixed-income, % large cap, % small cap, fixed-income quality, duration, etc.)
    • Update (or reconfirm) the allocation for each client at least annually
  • Overall Portfolio Oversight
    • Make decisions across every client account as to which financial assets will be held and which assets will be sold and reallocated
      1. Select which assets to assign to each individual money manager
      2. Measure the success of the individual money managers
      3. Replace individual money managers when necessary
      4. Provide oversight for assets not under the control of any individual money manager (individual equity holdings, bank operating account holdings, cash equivalent holdings)
      5. Research & recommend suitable investments for the allocation recommended
      6. Establish Buy, Sell & Hold Decisions for every financial asset
        • Create a written (sell strategy & schedule) plan for all "concentrated positions"
        • Every company stock grant or stock option has a written (buy, sell or hold) plan
        • Each financial asset holding (position) has a written "sell strategy"
      7. Monitor investments and performance
      8. Reallocate financial assets when needed
    • Individual Money Management/Account Management
      • Each client may have one or more of the following into which "cash" is assigned by an Overall Portfolio Manager (above), given their portion of assets to manage, which is then invested by this individual account manager (or money manager):
        • Examples of Account Managers
          • Turn-key Asset Management Program (TAMP), which manages an account with multiple holdings
          • Privately Managed Separate Account Managers, which manages an account with multiple holdings
        • Examples of "Money Managers"
          • Mutual funds
          • Index funds
          • Exchange Traded Funds (ETFs)
    • Daily management
      • Arrange for client distribution requests
        • Wire money to clients
          • Set up one-time distributions
          • Establish ongoing systematic distributions
            • Establish an adequate "cash" balance in the accounts to accomplish the systematic withdrawal
            • Coordinate with the Money Manager if sales of financial assets are necessary to create "cash" for systematic withdrawals
            • If recommended, ensure income tax withholding amounts are established for systematic withdrawals
      • Coordinate and verify deposits
        • Ensure client deposits settle in good order
        • Set up systematic deposits or additions and routinely checking that the deposits settle in good order
      • Execute orders
        • Place trades for the Money Manager (execute buy or sell tickets)
        • Submit account applications & instruction forms
          • Applications, custodial agreements, distribution request forms, etc.
          • Secure client signatures on forms as required

     

    Other Periodic Activities

    • Reconcile statements to ensure all trades were placed properly and all inflows & outflows reconcile to the beginning & ending balances, including:
      • Dividend & other investment distribution settlements
      • Client deposits & withdrawals
    • Ensure "best execution"
    • Perform all due diligence and financial asset oversight: any issue related to any financial institution, individual or entity operating at a less than optimal performance level are also to be identified with recommendations made to the Ideal Client 



    Other Deliverables Team Members Who May Perform Some or All Of The Above Responsibilities

    The Money Manager SME role may be currently vested in several people or firms. Here are some various scenarios which could work well, as long as the Trusted Advisor does not spend any time involved in overseeing these tasks.

    Good Scenario

    1. Financial Planning Subject Matter Expert sets the asset allocation for each Ideal Client
    2. An internal or external Deliverables Team Member is assigned to the Individual Portfolio Management duties
    3. A turn-key Asset Management Program (TAMP), mutual fund(s) or other external Money Management strategy is selected to implement the allocation set for each Ideal Client
    4. An internal or external Deliverables Team Member performs all daily management duties

     

    Better Scenario

    A Charted Financial Analyst is hired as "Team Captain" to:
    1. Establish (or coordinate) each client's asset allocation
    2. Recommend Individual Portfolio Management decisions regarding a client's existing investment positions across all their accounts (in every institution)
    3. Establish a plan to fund the allocation (into the various approved TAMP, mutual fund or external money management options)
    4. Direct (or coordinate) all daily management activities to place trades, transfer accounts and otherwise fund each client's allocation (so the Trusted Advisor doesn't have to)

    TIP: This arrangement could be as a flat-fee per client (up to some maximum amount) or some other fee-for-service arrangement, rather than any compensation based upon per-cent of assets.

     

    Best Scenario

    Fully outsourced to an external Subject Matter Expert with an existing team in place to:
    1. Establish a suitable asset allocation (or coordinate with the Financial Planning Expert) for each Ideal Client
    2. Oversee the external "Money Managers," TAMP, or "packaged products" selected for each Ideal Client
    3. Provide conflict-free due-diligence & assessments of each money manager to measure routinely measure success and re-establish suitability
    4. Perform all daily management duties

    TIP: This arrangement could also be as a flat-fee per client (up to some maximum amount) or some other fee-for-service arrangement, rather than any compensation based upon per-cent of assets.