I have been advising clients on money matters for 30 years.  My philosophy has evolved over the years based on personal experience.  I have made plenty of mistakes with client's money as well as my own money in the early years, but they have all been very valuable learning experiences and many of the following checks I make are as a result of these experiences.

First, I want to meet the people who I am recommending we hire to manage your money. It only makes sense to me that I should have some personal experience with most if not all the folks who are making the decisions and what their philosophy is.  You can get a good idea of the kind of people you're dealing with if you get a chance to spend some time with them.  There are a small number of companies I have chosen to manage a portion of my client's money.  If we can find honest people who deal straight with us, I believe we have won half the battle.

I like to see these same folks have a significant amount of their own money invested in their funds.  I think you come to work and look at things differently when it is your own money you are managing.  I also want to see a good long term return and someone who is able to adapt to changing conditions to provide respectable returns in any market environment.  I have noticed that people who tend to hold onto companies longer tend to have lower expenses - a common theme among many of the managers I use.  These people almost universally are very concerned with the price they pay to buy.  Cheapskate is another term used to describe them.  They are looking for a dollar's worth of value that they can buy for less than a dollar.  These folks potentially do better in down markets because they didn't overpay when things looked better – thus they have the potential to have better, more consistent returns.

I don't want to have to make a daily decision on what to sell and repurchase, so I think it makes sense to align with people who aren't jumping on the hot trend and riding it to spectacular returns only to watch that same manager experience a spectacular decline.

I am originally from Estherville, Iowa – a small town of about 7000 people.  When I started in this business 30 years ago, my Dad, who has run a local business his whole life gave me one piece of advice:  “You better deal honestly with people, because if you don't it will be all over town by the end of the week.”

That is how I've tried to conduct myself ever since.