2024-05-31: 18 minutes
Speaking with a client I came across, not for the first time, a question that remains absolutely essential to those seeking solutions in managing their finances: who do you ask for help? My client’s perplexities arise from both the imprecise definition of some terms and the opacity with which they are freely used by investment management and banking groups. I have therefore summarized for him what I believe are the three roles. In some cases there can be overlaps, where for example an advisor is also in charge of managing portfolios. The important thing for the client is to know these roles, to understand the incentives – how they are compensated and by whom – and to avoid conflicts of interest as much as possible. Thus we have:
1- Advisors – are in charge (or should be) of: organizing the client’s assets and defining the investment program; implementing the investment program; and finally disciplining the client so that the process develops over time according to predetermined plans (probably the least understood and least appreciated activity by most clients, but perhaps the most important one). They are compensated by the client either with a fixed ‘salary’ or according to a formula associated with the size of the assets under supervision; some receive fees or retrocessions from the managers to whom they suggest the client entrust all or part of the assets.
2- Portfolio managers (management houses and/or individuals) – manage portfolios for clients. They are compensated with management fees linked to the size of the portfolio, often complemented with a ‘bonus’ associated with its performance.
3- Promoters, or client relationship managers – are responsible for finding and acquiring clients and communicating with them over time. They are compensated in various ways but generally the formulas of the principal component are associated with the volume of assets acquired or products placed.
It took two days for a jury in New York to convict Donald Trump, guilty of all 34 counts attributed to him. Those two days translated into just under ten hours of deliberations, or less than 18 minutes per count. Even allowing for the overwhelming nature of the evidence, the speed of the verdict is impressive. As expected, Trump has vociferated and blabbed about the verdict by saying false things, threatening the judge and the prosecutor and the members of the jury, blaming an unfair and rigged judicial system, uttering dislocated phrases and expressing himself in an incomprehensible manner. But something else frightens me more: news reports in recent days indicate that Schwarzman (head of Blackstone Group, a private equity and real estate investment house), Ackman (head of Pershing Square, a hedge fund) and Musk (who else?) support the former president’s re-election bid. Don’t these people understand that Trump is not working for the nation’s welfare but only for his own welfare, and today also for his salvation from justice? Do they not see any geopolitical risk in installing such an individual in the White House? How can smart, professionally successful people with boatloads of money find themselves willing to back a criminal? And for what? Lower taxes? Immigration under ‘control’? This is what we have come to in America.
[Sources: Axios; The New Yorker]
