Investment Manager Ethics

Serious Investors acting to build and protect their wealth, who work with financial advisors or private family offices may face a range of challenges, that hinders the relationship and in return affect their financial future, these challenges can be categorized mainly in the following groups:

  • Conflicts of interest
  • Lack of communication
  • Disagreements over investment strategies

One of the most common challenges investors face is conflicts of interest. Financial advisors may have incentives to recommend certain investment products or services that may not be in the best interest of their clients. To address this challenge, investment manager must disclose with their investors any conflicts of interest, fees and commissions in full transparency and ensure that all investment recommendations are aligned with the investor specific objectives by setting:

  • Quantifiable benchmarks
  • Time frames
  • And expected volatility

Another common challenge that investors face is “lack of communication” from their advisors. Investment managers must establish clear communication protocols with their investors and ensure that they receive regular updates on their portfolio performance and investment strategy. If communication is lacking, investors are recommended to consider finding a more proactive asset manager.

Disagreements over investment strategies is a critical challenge for the future of the relationship. it’s important for the investment manager to communicate their concerns to their Investors and work together to find a solution that meets the Investment Objectives. This may involve adjusting the investment strategy or finding a changing financial advisor who is better aligned with the investment philosophy.

Fortunately, there are a number of steps an Asset Manager can take to address these challenges and ensure a positive working relationship with their Investors, like:

  • Education
  • Communication
  • Setting expectations
  • Attention

Finally, Financial managers should make sure that they have a clear communications on the fees associated with the advisory services. Advisors may charge a variety of fees, including management fees, performance-based fees, and transaction fees. It’s important for investors to understand these fees and ensure that they are reasonable and aligned with the value of the services being provided.

In summary, to address these challenges, investment managers should establish clear lines of communication with the investors, ensure that investment strategies are aligned with the investor financial persona. and By taking these steps, Investment managers can ensure a positive working relationship with their investors to achieve their financial objectives. Because investment managers are responsible of the most important asset the investors family hold, which is currency. A positive and long relationship will affect the investors family and their wealth for generations to come. Hence the Investment Manger must maintain this integrity framework through the relationship and earn trust dividends over time.