By Ryan Bierds, CFA®

What to Expect from Your Investment Manager BB&T Perspectives

Picking an investment manager can be a daunting task. It seems as though almost every financial company is offering investments in some shape or fashion. Suffice it to say, not all offerings are equal. Fiduciary portfolio managers, brokers, financial advisors and insurance specialists all provide some form of investment management. Even the savviest investors are confronted with a series of questions on how to select this important advisor. So, what are the attributes that make an investment manager unique and effective? The appropriate solution depends on the unique preferences of each client. Not all companies provide objectivity, transparency or specialists in key areas.

There are several non-negotiables in the investment manager selection process. First, you should expect full transparency in the manager’s investment philosophy, pricing, compensation, holdings and performance. Next, you should look for an investment manager that is credentialed, operates under the fiduciary standard and is armed with a process and platform capable of delivering superior returns. In addition, you and your manager should have access to a team of specialists that have in-depth experience in various financial instruments and processes relevant to your needs and circumstances. Finally, a thorough discussion of your unique situation and goals should always occur before any investment recommendations are delivered.

Why the Fiduciary Standard is Important to You

Unfortunately, there are entities and individuals who call themselves financial advisors who may not have your best interests in mind. Expensive products, conflicts of interests, poor communication, high tax bills and underperformance are often cited.

Many companies fail to eliminate conflicts of interest, and that is why partnering with a firm that uses the Fiduciary Standard is so important. The Fiduciary Standard mandates that investment managers are legally responsible for acting in your best interests. Adhering to the Fiduciary Standard helps to eliminate conflicts of interest and shows clients that their investment manager is objective. Selecting a firm with salaried fiduciary portfolio managers not incented on any recommendations made to clients protects your interests.

Importance of the Investment Policy Statement (IPS)

It is critical for your investment manager to understand your personal and financial needs and preferences. Based on this understanding, your manager should be able to craft a solution to meet your goals. This process is both flexible and robust. It should start with the creation of an Investment Policy Statement (IPS), where you and your portfolio manager agree on a suitable level of risk and an asset allocation. While the IPS provides structure and clarity on your investment strategy, it also can be as flexible as you need. Your manager can alter your target asset allocation or investment strategy at your direction, and a discussion of the target allocation should typically occur at each portfolio review. Based on your specific IPS, a customized set of investment solutions are developed and should be managed and monitored by a dedicated portfolio manager.

Access to Financial Knowledge and Resources

In order to optimize the investment plan you develop, your investment manager should be able to call on financial experts across an array of areas. Your financial plan should reflect your life – addressing the various fields important to ensuring your financial success and security.

Access to an experienced specialist offers a continuum of support as you transition from the early years of wealth accumulation to the time when asset preservation takes priority and your attention shifts to gifting, sheltering and transitioning. At each stage, different specialties take on new importance.

In addition to investment advice, make sure you have access to banking, credit, insurance, and trust and estate planning resources. The right investment manager will look at your whole financial life.

Making Your Decision

In summary, when choosing your investment manager, you should have a crystal clear understanding of the following issues:

  • Is my investment manager objective? How is my investment manager compensated? Does their compensation affect their ability to deliver independent and objective advice?
  • Does my investment manager truly have the expertise to understand my risk tolerance, investment goals and unique preferences? Is he/she able to customize my portfolio based on my situation?
  • Does my investment manager have a sophisticated process that can customize a tax plan specific to my needs, while delivering strong risk management and long-term performance?
  • Investment management is just one facet of my financial picture. Does my investment manager operate in a team-based environment with multiple specialists?

Understanding these issues and having a trusted financial partner will help you achieve financial success. Ask your BB&T Wealth advisor to review the issues and about BB&T Wealth’s commitment to help you through all of life’s stages and earning your trust to help you build and enjoy a bright financial future.

By Ryan Bierds, CFA®

What to Expect from Your Investment Manager BB&T Perspectives

Picking an investment manager can be a daunting task. It seems as though almost every financial company is offering investments in some shape or fashion. Suffice it to say, not all offerings are equal. Fiduciary portfolio managers, brokers, financial advisors and insurance specialists all provide some form of investment management. Even the savviest investors are confronted with a series of questions on how to select this important advisor. So, what are the attributes that make an investment manager unique and effective? The appropriate solution depends on the unique preferences of each client. Not all companies provide objectivity, transparency or specialists in key areas.

There are several non-negotiables in the investment manager selection process. First, you should expect full transparency in the manager’s investment philosophy, pricing, compensation, holdings and performance. Next, you should look for an investment manager that is credentialed, operates under the fiduciary standard and is armed with a process and platform capable of delivering superior returns. In addition, you and your manager should have access to a team of specialists that have in-depth experience in various financial instruments and processes relevant to your needs and circumstances. Finally, a thorough discussion of your unique situation and goals should always occur before any investment recommendations are delivered.

Why the Fiduciary Standard is Important to You

Unfortunately, there are entities and individuals who call themselves financial advisors who may not have your best interests in mind. Expensive products, conflicts of interests, poor communication, high tax bills and underperformance are often cited.

Many companies fail to eliminate conflicts of interest, and that is why partnering with a firm that uses the Fiduciary Standard is so important. The Fiduciary Standard mandates that investment managers are legally responsible for acting in your best interests. Adhering to the Fiduciary Standard helps to eliminate conflicts of interest and shows clients that their investment manager is objective. Selecting a firm with salaried fiduciary portfolio managers not incented on any recommendations made to clients protects your interests.

Importance of the Investment Policy Statement (IPS)

It is critical for your investment manager to understand your personal and financial needs and preferences. Based on this understanding, your manager should be able to craft a solution to meet your goals. This process is both flexible and robust. It should start with the creation of an Investment Policy Statement (IPS), where you and your portfolio manager agree on a suitable level of risk and an asset allocation. While the IPS provides structure and clarity on your investment strategy, it also can be as flexible as you need. Your manager can alter your target asset allocation or investment strategy at your direction, and a discussion of the target allocation should typically occur at each portfolio review. Based on your specific IPS, a customized set of investment solutions are developed and should be managed and monitored by a dedicated portfolio manager.

Access to Financial Knowledge and Resources

In order to optimize the investment plan you develop, your investment manager should be able to call on financial experts across an array of areas. Your financial plan should reflect your life – addressing the various fields important to ensuring your financial success and security.

Access to an experienced specialist offers a continuum of support as you transition from the early years of wealth accumulation to the time when asset preservation takes priority and your attention shifts to gifting, sheltering and transitioning. At each stage, different specialties take on new importance.

In addition to investment advice, make sure you have access to banking, credit, insurance, and trust and estate planning resources. The right investment manager will look at your whole financial life.

Making Your Decision

In summary, when choosing your investment manager, you should have a crystal clear understanding of the following issues:

  • Is my investment manager objective? How is my investment manager compensated? Does their compensation affect their ability to deliver independent and objective advice?
  • Does my investment manager truly have the expertise to understand my risk tolerance, investment goals and unique preferences? Is he/she able to customize my portfolio based on my situation?
  • Does my investment manager have a sophisticated process that can customize a tax plan specific to my needs, while delivering strong risk management and long-term performance?
  • Investment management is just one facet of my financial picture. Does my investment manager operate in a team-based environment with multiple specialists?

Understanding these issues and having a trusted financial partner will help you achieve financial success. Ask your BB&T Wealth advisor to review the issues and about BB&T Wealth’s commitment to help you through all of life’s stages and earning your trust to help you build and enjoy a bright financial future.

About the Author

Ryan Bierds

Ryan Bierds

Senior Vice President, Regional Director of Portfolio Management

Ryan is responsible for the customized investment management of client accounts in North Carolina and Texas. He has more than 13 years of investment experience. Ryan earned a B.A. in Economics from North Carolina State University and an M.B.A. from the University of North Carolina.