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Managed Money

Managed Money Louisiana

Managed money is a way in which investors rely on a money manager to make decisions regarding their investment choices. Managed Money is typically done on a fee basis varying firm by firm. Managed money takes a more personalized approach than getting involved with mutual funds or otherwise. There are numerous benefits and advantages to managed money for investors. There is a belief among investors with managed money that they may earn higher returns with an investment manager than they would without one. Managed money generally has fewer transactional costs and involves less personal analysis. Investors have multiple options for fund allocation with managed money in the investment market. Managed money is a strategy in which investors take advantage of services offered by financial professionals such as an investment advisor or investment manager.

Portfolio Management

Portfolio management, a function of managed money, selects, prioritizes, and controls one’s assets. Portfolio management is meant to line up with investor’s objectives. The overall goal is to balance investor’s goals and their risks while optimizing investment return. Portfolio managers are responsible for creating and managing investment allocations for their private clients, which involves determining a client’s appropriate risk tolerance and applying that to the investment strategy. A true portfolio manager spends more time on the analytical aspect of portfolio management. Portfolio management usually requires a degree in business, finance, or economics. Portfolio management requires specific attention to market conditions, trends, and overall economic status. To do so, portfolio managers keep up with investment and trade news and work with investment analysts and researchers to optimize their effectiveness.

A large component of portfolio management is relationships. Portfolio managers contact their clients to advise them on present economic conditions, updated research, and trends that may impact their portfolios. As part of their role as fiduciary, which requires the utmost level of ethics, portfolio managers meet with their clients annually at a minimum to ensure that the portfolio is still in line with the investor’s objectives. Portfolio management involves high regulatory standards, so portfolio managers must provide investors with proper disclosures, privacy law information, anti-money laundering requirements, and anti-fraud measures.

Types of Portfolio Management

  • Active Portfolio Management – The goal of active portfolio management is to make better returns than the market dictates. This method of investing usually buys stocks that are undervalued and sell after they climb above the norm. Active portfolio management involves quantitative analysis of companies to determine the cost of a stock in relation to its potential. Active portfolio management relies on ratios to support claims and tends to steer away from market hypotheses. Portfolio diversification is common in active portfolio management. The main issue with this approach is that it boils down to the skill of the portfolio manager, and that varies by individual.
  • Passive Portfolio Management – On the other hand of portfolio management is passive portfolio management. This theory involves the belief in the efficiency of the market hypothesis. Passive portfolio management claims that company fundamentals will be reflected in the price of its stock. So, passive portfolio management dabbles in index funds, generally having low turnover but good long-term outcomes. The point is to opt for lower yields to combat the cost of management fees while profiting from stability.
  • Discretionary Portfolio Management – Discretionary portfolio management gives the discretionary manager full leeway to make decisions for the client. Individual goals and timeframes are considered, but the discretionary manager utilizes whatever strategy they believe is best. Once the assets are under management, the investor can sit back and trust.
  • Non-Discretionary Portfolio Management – Non-discretionary portfolio management essentially models more of a financial counselor relationship than anything else. It involves advising the investor which route they should take. Non-discretionary portfolio management gives the pros and cons, but the investor makes the decisions.

Investment Advisor

An investment advisor, sometimes referred to as an investment manager, can offer full-service portfolio management for their clients. Some investment advisors take a holistic approach to portfolio management, determining asset allocation percentages and selecting individual funds or securities for the managed portfolio. Many investors choose to be involved in investment decisions in their portfolios. Still, there are those investors who choose to rely one hundred percent on the investment advisor to manage their money. Investment advisors charge annual fees or fees based on the total assets under management with portfolio management services. Managed money portfolios enable us to find the best solution for your unique needs and lifestyle. Learn what our managed money program can do for you!