Do you need a money manager? See for yourself!

Do you know that you have enough savings for your retirement life? Is your current pay taking care of your expenses? These are the questions we often ask ourselves. But do you get the answer to it? For those who are not getting the right answer to these questions then you might consider having a money manager for yourself.

One of the biggest reasons that you may need a money manager is if your portfolio is failing to meet up to expectations. The most obvious comparison investors should make and don’t make often enough is their current money manager’s performance versus the appropriate index. A very important component of investing is relative performance, or compared to a benchmark. A more general consideration is whether you aren’t saving enough for retirement. This warrants a more absolute analysis. Hiring a money manager can help you crunch the numbers and get a more definitive savings plan in place.

Investors who are especially enterprising have the time and interest to devote to their own investing. On the other side, defensive investors don’t have the time or interest and should therefore look to outsource their money management activities to an outside money manager. This basically boils down to do-it-yourself or do-it-for-me investing. Those in the latter category should hire a money manager, or new one if the current manager isn’t stacking up to the index.

If you hire an advisor, the two most important metrics to be aware of are fees and performance. If a manager can beat the market, he or she needs to outperform by more than the management fee to add to value for clients. Generally, a fee of 1% is quite reasonable to manage a stock portfolio. Another perfectly viable option is passive options. In that case, their fee should be much less than what an active manager might charge. In return, the best an investor can do is match the index, less the small passive fee needed to run the portfolio.

Considering an outside manager can be an important step to eventually securing financial freedom, or at least enough funds in retirement to cover bills and leave funds to travel and enjoy life. Fees and performance are the two most important components if you hire an outside manager, though there are many other considerations too.