Many investors have their assets managed by an asset manager. This can be done by the principal bank, an independent asset manager or by the purchase of an actively managed investment fund. On the one hand, investors expect better results and on the other hand they often do not have the time, expertise and market proximity to manage the assets themselves.
But which form is the most suitable and which criteria have to be observed in order to fulfill the customer’s expectations in the long term? Because one thing is for sure: there will always be turbulent times in the financial markets. The role of the asset manager is to prepare and assist the client so that in the long term good results can be achieved.
The selected investment strategy is responsible for the long-term performance. Therefore, it is crucial that the choice of the investment strategy is handled with great care. The capacity and the willingness to take risk are important terms that must be evaluated with the customer. In addition to the usual customer profile, special customer wishes should also be clarified. These may be questions about the exclusion of certain asset classes.
The investor should learn how the investment strategies have historically performed. Which returns and also fluctuations have been achieved in the past and which returns (after deduction of the costs) are to be expected? The use of scenario analysis or simulations is helpful.
When defining the investment strategy, the key points for the mandate tender will be determined at the same time.
When looking for the right asset manager, the personal relationship and the track record are crucial. The client may require an open and transparent communication from his advisor / asset manager. This includes detailed information with regard to the implementation of the administration and, above all, which costs are charged.
The performance statement should be presented on the basis of actually achieved investment results or publicly available fund data.
The customer may expect a timely and complete offer. In this regard, no compromises should be accepted. It should be stated in clear and comprehensible terms who, how and at what cost the management of a mandate is implemented.
The employees’ length of service not only allows conclusions to be drawn on the corporate culture, but is also decisive for the customer due to the confidential information. More detailed information (CV) must be provided about the directly responsible persons and their deputies.
A detailed position statement also provides important information regarding the implementation of the investment strategy or which investment instruments are used.
Costs and commissions
The costs of the asset management are a very important aspect and must be disclosed transparently. Especially in today's low interest rate environment, costs are a burden on returns.
In order to be able to compare offers, a consideration of the total costs is essential.
The costs include:
• Administration fee including information on the calculation basis
• Presentation and calculation of indirect costs due to the use of investment products (funds, etc.)
• Handling of trailer fees and other discounts
• Information regarding the conditions of the custodian banks, the trading costs (brokerage fees) and margins on foreign currency transactions.
All in all, we recommend taking enough time to choose the asset manager.
The following questions should be satisfactorily answered:
• What expectations and framework conditions does the customer have?
• Which managers are the best to respond to these requirements?
• Which offer is comprehensive, comprehensible and transparent?
• Are all costs transparent?
And last but not least, ask your asset manager how does he differ himself from his competitors.