Some Considerations for Medical Professionals
By Clifton N. McIntire, Jr.; CIMA, CFP®
By Lisa Ellen McIntire; CIMA, CFP®
Sometimes even the best made physician financial plans just don’t work out. And, despite extensive time and energy spent on due diligence before hiring an investment or portfolio manager, it becomes evident that you must change managers.
Some Thoughts for Doctors
Here are a few thoughts when considering a portfolio manager change:
- You should have initially hired the manager with a long-term relationship in mind. Realizing that styles go in and out of favor, we were not simply buying last quarter’s best numbers; in 2009.
- Market statistics often mask “real” performance of money managers, both good and bad. The S&P 500’s 2007 performance can be attributed to a few very large companies.
- Generally, a full market cycle would be required to assess money manager performance. Having said that, what could happen that would warrant changing managers? Here is a brief list:
- Style Drift: You have a growth manager and when growth stocks turn down, you begin to see the purchase of “value” stocks.
- Not Sticking to Previously Established Disciplines: If the process is to sell if the price declines 20 percent down from the original buy range and now they are holding because, “This time, it is different.”
- Personnel Changes: New analysts are hired with a different philosophy. Recent transactions seem 180 degrees off course.
- Principals Leave: Like professional sports figures, good money managers are in demand and sometimes change firms. The replacement may be a 29-year-old MBA with little experience.
- The Firm is Sold: This may be good new if it broadens ownership and helps retain good people. Look for long-term incentive driven “staying” bonus plans.
- Loss of Major Accounts: Reduced revenues may force cut backs in personnel and services. Attention may shift from portfolio management to marketing.
Assessment
Finally, sometimes it is just not working. Misjudgments in asset allocation and poor stock selection over a reasonable period of time can be reason enough to change managers.
Conclusion
And so, your thoughts and comments on this Medical Executive-Post are appreciated. What is your trigger for portfolio manager change? Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, be sure to subscribe to the ME-P. It is fast, free and secure.
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