Step 5 – Monitoring Managers

Now that you've picked your managers and your intention is to stay with them forever, what's there to do?

Well we hope that nothing changes with the people, but sometimes they change and sometimes we make the wrong decision for the wrong reasons. So every quarter (yes, every three months) review your strategy overall and each manager against your expectations and the market indices.

How to Review Managers and Strategy

Whether you are working through a broker/advisor or directly with managers or both ask them to provide you on a monthly basis:

  • A portfolio valuation of your account with them
  • A list of transactions - buys, sells, dividends, interest payments, deposits, withdrawals and fees
  • Any relevant comments for the performance of the account over the month

Ask them to provide you on a quarterly basis:

  • A quarterly report outlining what their performance has been against the market indices and benchmark for your account and what their views are
  • Peer Group charts reflecting the strategy you are invested with them.  I will write a Blog on peer group charts.

Understand what is going on in your portfolio and why. It may be down which is not a concern if it's consistent with the market and/or the manager's style. It may be up which is not necessarily anything to be happy or relaxed about as it's just one quarter. A portfolio strategy is a marathon - not a sprint.  Patience is truly a virtue.

On a quarterly basis, discuss with your broker/advisor/managers:

  • Any questions you may have
  • Confirm with them each quarter that the people/team remains the same. If there are changes, you would like to know right away. Then you can discuss the impact to determine whether you need to investigate further.  Sometimes the changes/additions are positive.

Once a year, review your overall fees and make sure they meet your expecations.  If not discuss them with your broker/advisor/manager.

In Step 1, you completed the Portfolio Performance Spreadsheet to determine your current position. Now make a new version of this spreadsheet to track each mutual fund/manager from inception and thereafter. There is an example sheet within the same file.  For each account, each month/quarter input the value of the account and whether your deposited or withdrew any funds.  The sheet will keep track of your overall portfolio strategy performance, month by month or quarter by quarter.

Special Note

If you are feeling uncomfortable about something it means that you do not have enough information or you have not received a fulsome explanation. Do not be shy - it's your money and you are paying for it to be managed properly.

Make sure you receive all the information you need to feel like you are in control. If you are intimidated by your broker, advisor or portfolio manager, let them know – typically they don’t mean to make you feel this way.  If they do not change their behaviour, than you may consider terminating them as you will have trouble trusting them in a negative market when you need to trust their advice the most.  

Ask the investment professionals you work with to always speak in layman terms - to never use investment speak. This will make it easier for you and will enhance your relationship with your investment professionals.  Remember, the people who really know their stuff in any profession know how to explain it to anyone. 

Monitoring managers and your strategy requires discipline.  Developing and executing your strategy requires your involvement.  Although you delegate parts of the strategy to various managers, you have to stay disciplined and involved with your portfolio strategy. No one cares about it more than you do.

That's all for the Steps.  More information will follow in the Blog.