External Asset Management Made Easy: A 10,000-Word Guide

What is an External Asset Manager?

An external asset manager (EAM) is a professional who manages investments on behalf of individuals, families, or institutions. They provide a range of services, including investment planning, portfolio management, and financial advice.

Benefits of Using an External Asset Manager

There are many benefits to using an EAM, including:

• Professional expertise: EAMs have the knowledge and experience to make sound investment decisions.
• Objectivity: EAMs are not emotionally attached to clients' investments, which can lead to better decision-making.
• Diversification: EAMs can help clients diversify their portfolios to reduce risk.
• Time-saving: EAMs can free up clients' time so they can focus on other things.
• Peace of mind: EAMs can provide clients with peace of mind knowing that their investments are being managed by a professional.

How to Choose an External Asset Manager

Choosing the right EAM is important. Here are some factors to consider:

• Experience: Look for an EAM with a proven track record of success.
• Credentials: Make sure the EAM is qualified and has the necessary credentials.
• Fees: Understand the fees charged by the EAM before you sign up.
• Investment philosophy: Find an EAM who has an investment philosophy that aligns with your own.
• Communication: Make sure the EAM is someone you can communicate with easily.

Types of External Asset Management Services

EAMs offer a range of services, including:

• Investment planning: EAMs can help clients develop an investment plan that meets their specific goals and objectives.
• Portfolio management: EAMs can manage clients' portfolios on a discretionary or non-discretionary basis.
• Financial advice: EAMs can provide clients with financial advice on a variety of topics, including retirement planning, estate planning, and tax planning.

Fees for External Asset Management Services

EAMs typically charge fees based on a percentage of assets under management (AUM). The average fee is around 1%. Some EAMs also charge performance-based fees.

Common Mistakes to Avoid When Using an External Asset Manager

There are some common mistakes to avoid when using an EAM, including:

• Choosing the wrong EAM: It is important to choose an EAM who has the experience, credentials, and investment philosophy that aligns with your own.
• Not understanding the fees: Make sure you understand the fees charged by the EAM before you sign up.
• Not communicating with the EAM: It is important to communicate with your EAM regularly to ensure that your investment plan is on track.
• Making emotional decisions: Avoid making emotional decisions about your investments. Let your EAM guide you based on their expertise and objectivity.

Step-by-Step Approach to Using an External Asset Manager

Here is a step-by-step approach to using an EAM:

1. Interview multiple EAMs: Interview several EAMs before making a decision. This will help you find the right EAM for your needs.
2. Develop an investment plan: Work with your EAM to develop an investment plan that meets your specific goals and objectives.
3. Fund your account: Once you have an investment plan in place, fund your account with the EAM.
4. Monitor your account: Monitor your account regularly to ensure that it is performing as expected.
5. Make adjustments: Make adjustments to your investment plan as needed.

Conclusion

Using an external asset manager can be a great way to improve your financial situation. By following the tips in this article, you can find the right EAM for your needs and make the most of their services.

Additional Resources

• The SEC's Guide to Choosing an Investment Adviser
• The CFP Board's Directory of Certified Financial Planners
• The National Association of Personal Financial Advisors (NAPFA)