14 June 2018
Written by Brock Erwin

The most successful investment advisors are good at marketing. Incentives play an important factor here, and since fees are charged as a percentage of assets, the more assets under management, the more fees that can be collected. Many advisors spend a large portion of their time in sales and marketing activities, which means less time spent on the investing part of the business. In fact, a survey of RIAs found that 18% of firms outsourced their portfolio management to a third party, allowing them to focus their time and energy on growing assets under management.

I’m disturbed of the thought of outsourcing the single most important part of the business. To me, this sort of model seems like the advisor is simply a middle-man, extracting a fee from the client in the process. Why not just cut out the advisor and go directly the portfolio manager? For me, portfolio management is crucially important, and not something I would consider outsourcing. At CleverInvesting, we are not in the business of asset gathering, and we spend zero dollars on marketing. Instead, our measure of success is investing returns over a long period of time. We hope to establish a track record that speaks for itself. Each and every investment is carefully selected after hours of research and due dillegence, and since I manage my personal account in the same way as my clients, I have an additional incentive to generate returns. If my clients are losing money, you can be assured I am losing money too.