Getting granular on investment performance: Key questions to ask your wealth manager

Excellent service and good-value fees can smooth over short periods of underperformance, but you should never stay with a firm that consistently disappoints on returns. Here, Lee Goggin, Co-Founder of findaWEALTHMANAGER, sets out 10 questions any serious wealth manager should be able to give good answers to.

Many of our users are wealth management clients who feel disappointed with the returns their provider is delivering and are exploring how much better they could be doing at a similar level of cost and investment risk. Others simply want to know how to get a better handle on how their portfolio is performing and why. Here are some probing questions clients can ask their advisers at review meetings to get granular on investment performance

1. Has my portfolio performed broadly in line with expectations?

Markets are unpredictable, but one of the key roles of a professional investment manager is to smooth over volatility and mitigate risks to generate more predictable returns. Surprises can still of course occur, but a good wealth manager should be able to explain convincingly how they are working to ensure your portfolio performs as you need it to, the vagaries of the markets notwithstanding.

2. How does the performance of my portfolio compare?

Your wealth manager should be able to give you a good idea of how your portfolio has compared to those of other clients at the firm if it is bespoke, and how those of other risk-ratings have fared if you are using a model portfolio.

Your wealth manager should be able to give you a good idea of how your portfolio has compared to those of other clients at the firm if it is bespoke, and how those of other risk-ratings have fared if you are using a model portfolio

The best firms will also offer comparisons against industry benchmarks to show how they are performing against their peers. Read our Guide to benchmarks to learn more about how to read performance.

3. Which asset classes, markets or specific investments have surprised you?

One would hope that few market developments are a genuine shock to wealth managers with significant research capabilities behind them, but short-term blips are par for the investment course. Dig into which asset classes, markets or specific investments have surprised your manager – either positively or negatively. Again, a convincing narrative of how investment strategy is playing out should be forthcoming.

4. How is my risk exposure looking relative to my objectives?

Returns are of course your reward for taking on an element of investment risk, and managing wealth optimally is predicated on taking on the right level to generate the returns you need.

Returns are of course your reward for taking on an element of investment risk, and managing wealth optimally is predicated on taking on the right level to generate the returns you need

Being too conservative about risk can be just as damaging as taking on too much. Confirm that your portfolio’s risk exposure continues to match your profile and investment goals, and certainly bring up any changes to your situation that might be relevant.

5. Which future risks are you working to mitigate?

Your wealth manager will be working to mitigate risks to portfolios in the short, mid and longer term, and it is always very illuminating to learn more about the ones that are top of a professional money manager’s agenda looking ahead. If you are using more than one provider, consider how their different approaches to longer-term risks compare.

Top Tip

Users often say they struggle to know what “good” investment performance is and this is difficult to pronounce upon as each client’s portfolio will have very different parameters set. Finding out what several firms deliver for clients similar to yourself will give you an excellent way to compare potential providers or to check an existing one is doing a good job for you.

Lee Goggin - Co-Founder

Lee Goggin

Co-Founder

6. How does my investment portfolio interplay with my tax position?

Of course, not all wealth managers offer financial planning in-house, but all should have an eye on how your investment portfolio will impact your tax position across Income, Capital Gains and – on a long-term view – Inheritance Tax.

There are numerous ways to buy, hold and sell investments tax-efficiently as part of a broader financial plan so make sure investments and tax are viewed side by side

There are numerous ways to buy, hold and sell investments tax-efficiently as part of a broader financial plan so make sure investments and tax are viewed side by side.

7. How are you working to keep investment costs down?

People often don’t consider the money saving role that wealth managers play, for instance, in offering access to institutional share classes rather than the more expensive retail ones DIY investors are limited to. More broadly, great attention should always be paid to constructing and managing portfolios cost-effectively, so ask what is being done here – and if anything more could be going forward.

8. How does my portfolio look from an ESG perspective?

Ethical investing, or investing with Environmental, Social and Governance (ESG) issues in mind is a real growth area as the idea that how we deploy investment capital can really effect change continues to flourish. Most good wealth managers can easily add an ESG overlay to portfolios and some can even tell you the carbon footprint of your portfolio, so don’t be afraid to ask if your portfolio could be better aligned with your ethical priorities.

Most good wealth managers can easily add an ESG overlay to portfolios and some can even tell you the carbon footprint of your portfolio, so don’t be afraid to ask if your portfolio could be better aligned with your ethical priorities

Get the manager your money deserves

Clearly, a wealth manager’s job is to generate the best possible net returns at the optimum level of investment risk, so no matter how much you may like your adviser and the service you receive please do ensure that you are getting the best possible results from your portfolio. Making like-for-like comparisons – seeing what similar firms can deliver for clients similar to you – is the best way to make sure your money has the manager it deserves. And, if you then feel you could be achieving better investment performance at a similar or lower cost, changing wealth manager is far quicker and easier than you might expect. Give us a few details about your requirements to automatically generate a shortlist of best-matched providers, or contact our expert team to discuss your situation.

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