Is your wealth manager smart?

James was very clever. He found school easy. The same was true at university until when he did a PhD he realised he was not as smart as he thought he was. In a small group of PhD students, James was average. Having been told how clever he was most of his life, his ego had taken a bruising.

How does this story relate to investing your money?

You only need to look at the FT funds pages, there are thousands of funds available for investors to buy.  Each fund is run by smart fund managers. In fact, you expect them to be smart. But are they that smart? If you are competing with other smart people, who is the super-smart one? In the most part, all the smart fund managers cancel each other out.

If there was a James or Susan amongst these fund managers, who were ‘super-smart’, do you think he/she would be managing your money? You would probably hope so. But then again, if they are super-smart, why would they manage your money?  The rewards for James or Susan are likely to be greatest in Hedge Funds.  So what are you left with? The people managing your money, whilst smart, are really just average amongst their competitors. And if they are average, what chance do you have of getting above-average performance consistently? The answer is not much.  Your best chance is luck.

Your question is how to obtain outperformance when the system drifts towards average? Want a conversation? Try our Investment Audit.