Asset manager? Or asset gatherer?

If you are willing to allow a third party firm to handle your investments, you should understand whether that third party firm is primarily an asset manager, or an asset gatherer. A financial services firm can be one or the other, but can hardly be both. The differences, as we see them, are as follows.

An asset manager ideally focuses on performance – on maximising client investment returns whilst minimising risk. An asset gatherer typically focuses on maximising assets under management (and therefore fees).

An asset manager ideally closes his fund once it has reached an optimal size. This enables him to concentrate on investment research and on maximising client returns. An asset gatherer typically leaves his fund open, no matter how unwieldy it becomes, in order to maximise fee income.

An asset manager ideally operates a limited number of funds, to which he has committed significant personal capital. An asset gatherer typically operates multiple funds, and is always interested in launching more. (Those funds that fail can then be quietly closed down.)

An asset manager ideally spends most of his time on investment research and managing his communications with clients. An asset gatherer typically spends much of his time on fund marketing and promotion.

An asset manager ideally attracts like-minded investors one at a time, through word-of-mouth referral and personal recommendation. An asset gatherer typically advertises aggressively to the mass market.

An asset manager ideally operates as an independent boutique. An asset gatherer is typically part of a full service investment business with multiple mouths needing to be fed.

An asset manager ideally operates in partnership with his clients. An asset gatherer is typically riven with conflicts of interest that can act as a barrier between the paying client and the efficient management of his portfolio.

We intend to act at all times as an asset manager. We intend only ever to co-invest alongside like-minded asset managers.