In today’s financial landscape, planning, saving, and investing your money is more critical — and complex — than ever. Luckily, a money manager can help. In this blog, we look at the responsibilities of a money manager and why you might consider hiring one.
Understanding Money Managers
Money managers are skilled professionals who execute clients’ investment strategies and manage their portfolios. Unlike other financial professionals, such as financial advisors or brokers, money managers focus on one thing: your investments. Also called “portfolio managers” or “investment managers,” they provide a specialized service that ensures your investments align with your financial objectives.
Expertise in the field of money management can vary. Some managers may specialize in estate planning, some in tax planning, others in retirement planning or risk management, and more. Whatever their specialty, the goal is to offer expertise in managing investments in ways that meet unique client needs.
In terms of qualifications, a bachelor’s degree in finance, economics, or a related field is typically the minimum requirement. However, most successful managers hold advanced certifications. The chartered financial analyst (CFA) and certified financial planner (CFP) are among the most respected credentials, providing a seal of approval for their skills and dedication to ethical conduct.
The Responsibilities of a Money Manager
Money managers carry many responsibilities, but at the heart of it all, their job is to help clients effectively manage their financial resources. They perform a comprehensive analysis of their client’s financial situation, create investment objectives aligned with the client’s goals, and develop a personalized management strategy to achieve them.
In addition to long-term strategy, money managers typically oversee day-to-day financial operations, such as monitoring the client’s portfolio, rebalancing as needed, and adjusting the asset allocation according to market conditions and the client’s needs, goals, and risk tolerance. Clients get more time to focus on other areas of their life knowing their investments are in good hands.
Why Engage a Money Manager?
Managing investments is no easy task. With the number of investment options available, in combination with our natural human bias, investors often make hasty decisions that lead to undesirable results. This is where a money manager comes in. A manager is there to bring objectivity and rationality to the investment process. They help keep you anchored to your long-term goals and help discourage any haphazard decision-making caused by short-term stock market fluctuations.
While there’s no definitive answer to when you should engage a money manager, as your wealth grows, hiring someone to help manage your investments becomes increasingly valuable. Juggling multiple investment accounts, planning for retirement, and navigating your day-to-day finances can be overwhelming. Having a manager there to take some of the load off can provide significant relief. What’s more, entrusting portfolio management tasks to a professional helps you avoid errors that could compromise your financial health.
What to Consider When Choosing a Money Manager
Qualifications: While money managers don’t need to be chartered financial analysts (CFA) or certified financial planners (CFP), these certifications require holders to act as fiduciaries, meaning they’re legally bound to put their clients’ financial interests before their own.
Area of expertise: Money managers often have specific expertise. For example, some might specialize in tax-focused portfolio management. They can also bring industry-specific experience to the table. For example, a manager with experience in the information technology sector could provide valuable insight when selecting tech stocks.
Experience: Ideally, your money manager has worked through multiple economic cycles, from periods of rapid growth to times of recession. This exposure equips them with the ability to tackle diverse needs and financial challenges.
Personal fit: Credentials and experience aside, you want to feel comfortable communicating with your money manager. Do you feel like you can be open and honest with your manager? Do they seem attentive to your needs and concerns? If not, they’re probably not the right fit.
Navigating your financial journey doesn’t need to be a solitary endeavor. At Ironwood Wealth Management, we’re committed to enhancing your financial health with our comprehensive financial planning and portfolio management services. Connect with us today to get started.
