An investment advisor friend of mine recently asked me to summarize for him the criteria I would use if I were looking to identify an investment advisor to work with and I came up with 15 characteristics I would look for in what for me would be an ‘ideal investment advisor’ which I would like to share with you. Words: 679
The comments above & below are edited ([ ]) and abridged (…) excerpts from an article written by Ian Campbell
1. Criteria #1, #2, #3 to infinity are openness, honesty, integrity, etc.
2. Someone who is smart, with a commitment to detail and, preferably, a Chartered Accountant (or if I was in the U.S. a CPA) with a strong theoretical accounting background and some real business operating experience.
3. Someone in good health who has a real chance of ‘being on the right side of the grass’ for some time.
4. Someone who is well traveled – in particular someone who has traveled (preferably on business) to China in particular. The ideal candidate would also have traveled in India, Brazil, Europe, and perhaps Russia.
5. Someone who is a ‘clients first’ person, and who has a great sense of responsibility to their clients.
6. Someone who has a clear understanding of each client’s risk/reward tolerance and hence appropriate ‘asset allocation’ (broken down into measurable steps), and is not locked into the ‘investment business mantra’ of diversification where market conditions and prospects ought to dictate ‘investment focus’.
7. Someone who actually does meaningful research on the companies they invest client’s money in, including visiting with company presidents, company facilities, etc.
8. Someone who purposefully involves their clients in the investment ‘decision making’ process.
9. Someone who is mature with at least 10 – 20 years investment management experience and good judgment.
10. Someone who is a good listener open to communication with his/her clients; who has strongly held opinions but adjusts those opinions continuously with both conversational and documentary exposure; who has sound logic to back up their opinions and is a good communicator of their opinions.
11. Someone who has strong references from an existing client base.
12. Someone who is skeptical of the manner in which the investment business generally operates, and in particular a disbeliever in the ‘efficient market theory’.
13. Someone with a proven track record, particularly in the difficult market conditions of all or some of the early 80’s, the early 90’s, and the period immediately after the ‘dot.com meltdown’.
14. Someone who is a student of macro-economics with no predetermined view on how things are going to unfold going forward – i.e. a good listener and flexible thinker who does not adhere to any given mantra such as “the U.S. is resilient and so always will be the world’s #1 economy”. While that view might prove to be right, I would only be interested in dealing with someone who constantly tested such a theory and was prepared to adapt away from it if logic so dictated.
15. Someone who provides a monthly reporting system that suits the way the client wants to review their portfolio and related investment return results.
Recognizing it is unlikely that any one investment advisor would satisfy each of the criteria in this wish list, you might want to go beyond the individual investment advisor and look to see if the people in the investment advisor’s firm collectively satisfy all these criteria.