When do you outsource something in your business and does the same apply for your wealth management? In business you outsource those activities that someone else can do better and that are not a core competence to your organization. So, how does the management of your wealth stack up to that?

Is it part of your core competences or should it be? It is probably not part of your core activities when you look at how much time you want to spend on it. If an hour per month would do, that would be great. You prefer to spend your time on other matters. But managing your wealth is pretty important, isn’t it. It is your future.

So maybe managing your wealth is not your core activity, it has definitely core relevance. Are you going to outsource it or not? It is not an easy question and everybody will have to make up their own mind on it.

How do you compare results

The other aspect of this question is how good you are at it yourself and how do your results compare to those to whom you could outsource your wealth management. Comparing results is not easy. Comparable data is often not available.

Outsourcers can easily make promises for the future or show some good historic result. But promises are just promises and historic results count only if they are compared with benchmarks and cover a substantial period.

Thus when comparing the result from a potential wealth management company with your own investment results, take into account the following:

• Compare results that cover a period that is long enough to include both some booms and busts. Take at least a period of 5 to 7 years.
   
• Compare net results. What I mean with this is to compare the results after the costs for your own transactions and all fees you would have to pay to the wealth manager are deducted from the gross investment result. To be fair to the wealth manager, you probably would have to put a cost on your own hours that you have spent on your wealth management.
   
• Analyse the practices of the wealth manager in depth. Understand exactly how they work and make your judgement on if this is sustainable. Madeoff (the guy who lost all the money for his famous clients in this big pyramid-scheme last year) made good returns for a long time for his clients, but it was not sustainable.
   
• Ensure that the same people who got the historic wealth management results are still there to get the results for you. You are still you, but people in wealth management companies could move on and someone new could start deciding what to do with your money.

Trying a wealth management service

My take on the outsourcing of my wealth management is that it is risky. It is an area that I want to be very careful in. It is my wealth and my future. Once it is lost, it will take a long time to get it back. But I have an open mind.

I would not mind to try an external wealth management company on a small scale to use it as a benchmark for the Stock Trend Investing system. I would choose a company that is transparent in how my portfolio looks like and that is rewarded with a percentage of my profit and not by the number of transactions they perform with my money. But I would continue to use Stock Trend Investing to manage the great majority of my wealth myself.

My advice to those who want to try a wealth management service is the following:

1. Only try wealth managers that are completely transparent on how they invest your money and whose mode of operation you understand fully.
2. Keep your investments very limited till you have reliable data for a period that lasts at least 5 to 7 years to compare results with benchmarks and your own results.
3. Know who is managing your money and be aware of any changes in this.
4. Improve your own investment results by applying Stock Trend Investing for the part of your savings that you want to invest and that you manage yourself. Do not compare the results of a wealth manager with your past experience, but compare them with the best you can do.

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What is your take on outsourcing your wealth management? Share your thoughts with the community here at Stock Trend Investing.