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KYM – Know Your Manager Checklist

There are stringent rules within the investment industry known as KYC (Know Your Client) regulations which lay out the information an Investment/Portfolio Manager needs to gather to be able to choose the most suitable investment products and services for each individual client.

But there are no such regulations specifying what clients should know about their Investment/Portfolio Managers. The onus is on you or your designated financial fiduciary to Know Your Manager (KYM).

In this article, we provide an essential KYM checklist to find the Investment/Portfolio Manager best suited to your needs and objectives.

What is an Investment/Portfolio Manager?

An Investment/Portfolio Manager (PM) has the skills, licensing/registration requirements and expertise to manage securities portfolios. PMs make decisions about investment mix and policy, matching investments to objectives, asset allocation, security selection, the timing of investment purchases and sales and balancing risk relative to returns.

The PM should individually and independently manage each client’s portfolio in accordance with the needs and objectives of that client.

PMs have a fiduciary duty to recommend investments that are suitable for you. The best PMs, through the KYC process, build a full understanding of your objectives, risk tolerance, life circumstances, investment preferences and more in order to match investment recommendations to your goals and needs.

Know Yourself First!

To effectively select and utilize the expertise of a PM you first need to accurately specify and communicate your own core investment beliefs and principles.

This is best fulfilled by working with a trusted financial professional who knows all your financial circumstances and needs.

They can then provide essential input by interpreting all your investment beliefs and principles into an actionable investment philosophy that can be accurately implemented by your other financial specialists including your PM.

Your investment philosophy is key for ensuring the optimal selection of a PM. 

Essential KYM (Know Your Manager) Checklist

Your relationship with your Investment/Portfolio Manager is expected to be for the long-term, so the hiring of a Portfolio Manager is a significant decision when it comes to achieving your investment objectives.

You should at a minimum ask for evidence of the PM’s qualifications and registrations and ask for information to be able to answer questions which can include:

  • How long has the PM been in business and what services has it provided in the past?
  • What overall services does the PM provide now?
  • What is the minimum account size for the service you need?
  • Does the PM offer investment products that match your needs?
  • How will the PM work with you to fulfill your investment needs?
  • Are the PM fees justified by level of service?

Qualitative KYM Characteristics

There are several qualitative characteristics that a PM should display. Listed below are some that you may want to think about:

  1. A PM should have an investment philosophy and process that is consistent with their strengths and capabilities and can be born out by historical evidence.
  2. A PM should have a clearly articulated investment philosophy that communicates the basic investment objectives, approaches and strategies employed.
  3. The PM’s security selection and portfolio construction processes should be well defined.
  4. The PM requires the temperament to remain rational in all market and economic climates and to stick to their investment process and this should be borne out by historical evidence.
  5. The PM’s investment philosophy must be aligned with your own.
  6. The PM should be driven by intrinsic motivators beyond just making you more money. These will serve to reinforce the above.
  7. The PM should have experience servicing clients similar to yourself.

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Established in 1985, Bloom Investment Counsel, Inc. is a Toronto-based independent, privately-owned boutique investment management firm with experience in managing in excess of $2.5B in assets over the years.

We provide actively managed, customized Canadian and U.S. dividend-paying portfolios for wealthy individuals, family offices, foundations, corporations, institutions and trusts.

For the last 25 years, we have specialized in one thing and strive to be the best at it—investing in income-generating investments, specifically dividend-paying stocks.

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This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.

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