From the start of the investment process there are various factors that have to be considered. This ranges from finding out exactly what the client wants/needs, to implementing these wishes and nurturing them until they come to fruition.
Manager selection plays a large part in ensuring success and growth for the client, which is always the main goal. Naturally, investors/Investment Advisors must practice a high level of due diligence when they are running through the manager selection process. Adequate alignment of the manager’s management fees/performance incentives to the investor’s goals is crucial. Having a large amount of candidates to choose from is a clear positive in this set-up.
Obviously there are quite a few criteria that are of importance when selecting an appropriate manager, such as how well their portfolios have performed over the last few years, if they are suitable for the needs of the client in question and if they have been following their outlined investment strategy. A large pool of financial managers to choose from allows FINAD to accurately select a manager that suits the client’s needs precisely. Furthermore, it allows for accurate weighting of the division of the client’s commitment, as there are many financial managers that specialize in different sectors.
FINAD tends to prefer specialized boutique managers instead of “allrounders” that offer a wide range of asset classes and investment styles. We look for managers with an advanced knowledge capacity in their field and a track record that proves this
A critical factor to consider is whether or not the manager has any “skin in the game” (i.e. has a significant portion of own net worth invested with the fund/strategy). This forces the manager to act more diligently as he is directly affected by his/her actions and choices.
Another integral part for the manager due diligence that must be looked into is getting a third party reference from an entity of high integrity that previously worked with the manager in question.
In general a thorough due diligence allows FINAD to be able to fairly compare all the different managers in the pool against one another. In this process further questions regarding operating risks (team size, “key man risks”, fund administrator, auditor, licensing) are also covered besides the investment process, historical track record and performance estimate for the strategy. This holistic process gives us confidence in our selected managers and increases the chances of success for our clients.
We believe in a process that sets high standards for our clients. At FINAD we look for management teams with best-in-class work ethic and superior track record. There are several management teams that have worked in tandem with FINAD for multiple years and have delivered strong returns for our clients. With those managers strong relationships have been established and co-operative work is able to be processed seamlessly. Maintaining these relationships is just as important, as it allows for consistency and trust to grow between the two entities to the benefit of the client.
Finally, when selecting third party managers for our clients we remain objective at all times and never take referral fees, commissions or any other form of incentive. If we recommend or invest in a manager, then that is because we are convinced it is the best choice for our clients.
