In seeking professional advice, there are many options available.  It is important you have a basic understanding of your choices before selecting one.

HEDGE FUNDS
Hedge funds are investment pools that cater to sophisticated investors and often execute exotic strategies in pursuit of various return objectives. These strategies can include derivatives, such as options and futures contracts on interest rates, exchange rates and domestic and foreign indexes. Additionally, hedge funds often use leverage, which can amplify gains as well as losses. They provide an excellent alternative investment option and should be used only as part of an overall diversified investment portfolio.

Points to consider: “Lock up” periods can make your money inaccessible for up to 1 or 2 years. Due to their complexity and emphasis on secrecy, hedge fund strategies can be difficult to follow. Be careful when it comes to management fees as they can be expensive. The typical fee structure charges 1-2% of assets per year, plus 20% of profits over a designated hurdle rate.

MUTUAL FUNDS
Mutual funds are managed by professional investment companies and invest in stocks and/or bonds, among other investment vehicles. Investors own shares, which represent a portion of holdings of the fund. Mutual funds are an excellent choice for the smaller investor because they offer a high degree of diversification.

Points to consider: The average mutual fund can hold hundreds of stocks, so if you own multiple funds it is likely that there is significant duplication. Beware of high expense ratios and tax inefficiencies and research the fund manager’s track record. Read the prospectus to understand the objective of the fund and to determine if it is appropriate for you.

FINANCIAL PLANNERS
Financial planners typically work with individuals of varying net worth to map out everything from annual budgets and insurance needs to investment strategy. They can provide a high level of individual service and typically charge by the hour or have a fixed price for a written financial plan.

Points to consider: While they can give you a solid overview of your financial position, few financial planners claim to be an expert in any one specialty. Mutual funds are typically recommended, which can increase overall expenses.

MULTI-FAMILY OFFICES
These firms usually offer investment advice together with tax and estate planning services. They are often attractive to wealthy families because they offer multiple services under one roof.

Points to consider: Multiple services can translate into high advisory fees and lack of significant expertise in any one particular field.

STOCK BROKERS
Stock brokers are most often members of large investment firms. They can suggest individual investment ideas or hire investment management firms for you. They can be a good choice for the “hands on” investor who wants to participate in every buy and sell decision.

Points to consider: Commissions for full service brokers can be high. If they are hiring investment managers for you it is unlikely you will have direct access to decision makers and poor communications among managers can create inefficiencies. Multiple managers also introduce another layer of fees.

BANK MONEY MANAGERS
These portfolio managers work for a bank, usually within the bank’s trust department. This option generally provides relatively “safe” low risk, low return investment strategies and are attractive to investors who already have an involved relationship with their bank.

Points to consider: Results can vary depending on the track records and credentials of individual portfolio managers. Employee turnover can be high and investment strategy can be limited by restrictions placed on managers at the corporate level.

INVESTMENT CONSULTANTS
Consultants typically allocate their clients’ assets among different investment managers and are paid to manager their managers. Consultants are primarily used by large institutions, but some offers solutions for the individual investor.

Points to consider: Total investment fees can be significant as you are paying the investment manager and the consultant for the advice on which managers to use.

INVESTMENT MANAGEMENT FIRMS
Portfolio managers construct customized portfolios designed to accomplish the goals and objectives of their clients. Investment management firms, like Darrell & King, typically offer investment expertise to individuals, families and institutions.

Points to consider: Most firms focus on specific market segments or investment styles which can limit opportunities. Long-term track records and management fees should be examined closely.