Wealth Manager Selection

Sep 02, 2021 | 1 min

Individuals and institutions entrust their funds to a dedicated wealth management firm for many reasons. The main reason is that investing is a full-time job that requires a distinct set of skills and experience.

Most of us do not have the bandwidth or the desire to manage assets full-time, so how do we assess and select a manager to help grow and preserve our capital?

David Darst, Analyst and Investment Strategists at The Family Office, lists key criteria that one should consider in selecting a potential wealth management partner.


Ethics is more than just following regulations. It is about intellectual honesty. If you sense that your advisors do not believe their own recommendations, you should seek the advice of those who do.

Philosophy & Approach

Success in any business requires clear focus. For an investment manager, this means a coherent “investment philosophy.” This could take many forms and there is no fixed template. But if the advisor cannot clearly define it to you in a sentence, or you cannot clearly summarize it yourself, it is a red flag.

Investment Edge

To justify charging a fee, a manager must add value. Typically, this means an ability to outperform the market. There are various ways to do this—such as leverage or deep sectoral expertise—and a manager should articulate and demonstrate this ”edge” to you in your initial meeting.

Discipline & Tools

Investment management is both an art and a science, but the scientific element is essential. A good manager will have a clearly documented methodology (e.g. for screening, selecting, and divesting securities) and analytical tools (e.g. proprietary models) that make their “edge” sustainable. If neither methodology nor tools are in evidence, you may be dealing with a gifted storyteller rather than a competent investor.

Human Capital

Many reputable firms consist of a multi-disciplinary team, and the names of these individuals are typically displayed on the website or else accessible by request. Basic research on background and credentials can be done on the internet. A deeper dive—requesting references from previous employers—may also be worthwhile. 

Performance History

Request data on how a fund or team has performed relative to its objectives and on a risk-adjusted basis. This is a great way to verify claims about focus, expertise and competence. Past performance does not guarantee future returns, but the willingness to share data is a good sign that the team stands by its history and has delivered adequately on its promises to former clients.

Lessons Learned

An honest manager will be open about mistakes and missed opportunities, and—more importantly—will share what they learned from them. No team is perfect, but the fund managers who can correct course and avoid past errors are the best prepared for an uncertain future.


Ultimately, the net returns (i.e. after fees) of the fund will accrue to your portfolio. Knowing your fees and where they are stated in the paperwork gives you a full picture of what you are receiving. Also, understanding how fees are structured gives you comfort that your interests are aligned with those of the fund (for example, knowing if the manager participates in both the upside and the downside).


It is worth also probing a fund manager on the highlights of their professional career, and encouraging them to share their most difficult experiences. A good fund will often prove itself during difficult times (e.g. a market crash or panic), and understanding this will give you a sense of how it will fare during future crises.

Success Factors

You can also ask them to define more generally what they believe the success factors are for a fund (for example “passion,” “discipline” or “integrity”). This is another way of revealing the team’s values, and whether they align with your own.

The purpose of the above is to cut through the common marketing and jargon in the asset management industry and establish the only two things that matter for a successful relationship: competence and compatibility.

The above points should give you ample data on which to make your decision. Given the importance of this relationship, it is better to err on the side of caution and listen to your instincts as well as the words you are hearing.

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