Standard deviation, or volatility, is a popular, easily quantified risk measure used to classify investments from low to high risk; however, focusing solely on volatility gives an incomplete view of an investment's risk.
Janet Kim Sing
Talking about risk can be tricky, as there are so many different categories of risk. This is why we are just choosing to highlight a few categories today.
If you have ever been in the market for a home, you have likely gone through the experience of having to make some concessions on your wish list. Similarly, when finding a Portfolio Manager and/or Investment Firm it is likely that there will be something that you are not overly excited about and that is completely normal. I would even go so far as to say that if everything seems too perfect, that is a red flag!
Meeting with prospective Portfolio Managers or Investment Advisors can initially feel intimidating, particularly if you have limited investment experience. But really, this should be a bit like a job interview that you are conducting. Since you are delegating this part of your financial life to someone else, your values and priorities must align.
Maria Dawes
One of the first questions you should be asking in your initial meetings is what professional license or oversight body a firm belongs to, if this has not already been disclosed or isn’t clear. There are, in fact, several regulatory bodies that exist. Make sure that you know which one the firm in question falls under and what that means.
A firm’s glossy website can leave a strong first impression and when you go in to meet with a firm and its team you will likely experience a similar charm. However, sometimes these efforts to entice new clients make it hard to see beyond the veneer. So how can you tell if a firm is telling the whole story?
Typically, a firm will manage the assets, but not physically hold them. There is an outside party, called a custodian, who holds custody over the firm and its clients’ assets.
Isn’t an Investment Advisor the same thing as a Portfolio Manager? Well, not necessarily...
Fees are a natural part of paying for a service, whether you’re paying a mechanic to fix your engine problems or paying a firm to manage your money. Within our industry, however, fees have tended to be very convoluted, layered, and difficult to understand.
