Trustee Education Series: Why Should I Hire an Investment Consultant?

Any professional knows the importance of return on investment (ROI) in making decisions about money management. Due to the pressure to attain a substantial and trackable ROI, many clients are requesting the assistance of professionals with a track record of excellence and experience in consulting in such matters. These aforementioned professionals are investment consultants, which are now frequently finding themselves in charge of providing clients with the insight that they need to invest and disburse funds responsibly. Do investment consultants provide enough of an ROI to earn their keep? We take a hard look at what you should know before retaining your next investment consultant in order to provide tangible ROI.

What Does Retaining an Investment Consultant Provide Clients?

While it is not always the case, individuals and/or committees (clients) who are typically charged with the oversight of institutional portfolios are not experts in investment planning, which leads to the need for an expert opinion and guidance surrounding this specialized focus. With immense responsibility on their shoulders, many clients dive head-first into hiring an investment consultant, retaining their services in order to maintain long-term fiduciary astuteness for their portfolio’s short and long term objectives.

Faced with such an important task, we firmly believe it should be a priority to provide clients with a list of considerations and tangible benefits to make engagement of a consultant a less daunting task. Paramount among these factors should be:

  • Partner with a consultant that is 100% independent. This will ensure they are able to provide objective, transparent solutions that are customized to your unique and changing needs.
  • Partner with a specialist. Since the financial services industry is so vast, partnering with a firm that offers consulting services as its sole line of business will ensure resources are focused on solutions that meet client needs. Alternate lines of business and/or revenue sources will distract from the consulting resources available to clients.
  • Partner with experienced professionals. The education and experience of leveraging a similar scope of work for similar clients is invaluable to creating timely, effective solutions. For example:
    • Your consultant should have a demonstrated history of building broadly diversified and progressive asset allocation structures, employing both traditional and alternative asset classes for a variety of client types.
    • Behind portfolio design, your consultant should be able to create a governance framework for building and maintaining your portfolio’s investment manager structure.
    • To carry out this governance, your consultant should deliver in-depth but understandable performance measurement and reporting systems that allow for thoughtful and successful evaluation of the portfolio.
  • Partner with an educator. Your consultant should foster ongoing coaching and training throughout your relationship as capital markets as well as portfolio objectives and constraints evolve. This education will foster the maintenance of diversified and progressive asset allocation and manager structures.
  • Finally, and probably most importantly, clients should demand accountability. A consultant is a partner in a portfolio’s success or failure and you should expect full accountability for the discussions they foster and the decisions they ultimately recommend.

All of these factors build a case towards the claim that retaining an investment consultant is a worthwhile investment for clients. By providing clients structure, evaluation tools and valuable education, an experienced investment consultant will provide clients a sense of confidence and trust that is invaluable. This partnership will ultimately foster a higher probably of portfolio success.

AndCo Consulting provides an independent, experienced team of consultants and focused resources that are at the ready should you need guidance or consultation for your investment strategy.