Why should you hire an Investment Advisor?


  • Active versus Passive Investment Management
By using an active management strategy, you would sell some investments, when it would work to your advantage to do so, before they mature versus using a passive strategy, which is to buy and hold each investment until maturity. An Investment Advisor will be able to recommend when and how to accomplish this on an investment-by-investment basis. Both active and passive approaches are acceptable, depending on your institution’s philosophy. However, overall yield often improves when moving from a passive to active approach.

  • Policy Development & Refinement
Your investment policy drives how you invest. An Investment Advisor will assist you in periodic investment policy review and refinement. Also, if approval by the governing body or another government agency is required, your Investment Advisor can assist with its presentation and help answer any questions pertaining to it.

  • Increased Governing Body Confidence
Governing bodies respect professional money management, and tend to have more confidence in this vital arena when you add this professional layer of advice and experience to your operation.

  • Diversification
Your Investment Advisor will help you determine if further diversification is needed, and would customize it to your investment policy. If you maintain all or a large portion of your holdings in an investment pool, your portfolio may not be as well-diversified as it should be. Your Investment Advisor will help you determine how much should be in the pool to meet your operating and liquidity needs, and how much could be optimally deployed in other investments.

  • Objective, 3rd Party Responsibility
Investment Advisors bring to you the advantage of serving a wide variety of public clients. Your advisor can bring this global perspective to help your operation. This gives you the advantage of having a municipal investment professional to discuss all aspects of investing and of economic conditions. You may find that a new strategic or tactical direction would be in order as the economy shifts.

  • Professional Presentations
It is often helpful to have your Investment Advisor make investment presentations to governing bodies, other policy makers such as finance committees, budget committees and investment committees, as well as to senior management. They can answer questions that are often best left to people who work with investments constantly, and who have the global view that comes with multiple clients, often spanning the region or the country.

  • Complements Existing Staff – Staff Does Not Decrease
A common concern among investment staff is that engaging an Investment Advisor will translate to a job loss or loss of control. That is clearly not the case. The Investment Advisor should be thought of as a compliment to your operation and never as a replacement of staff, control or responsibility. Think of it as adding to staff, usually at no net cost because of the opportunity for earnings improvement.

  • Turnover/Continuity of Operations
Turnover of investment staff can be disruptive during transitioning to new staff. An Investment Advisor can help bridge that gap so you can achieve smooth continuity of operations.

  • Access to Analytical Tools
Thanks to economies of scale, Investment Advisors have access to expensive analytical tools, such as Bloomberg. These are highly valuable resources to use as you determine which investments to buy as well as what to sell before maturity as a part of active management strategy.

  • Broker-Dealer Selection
Selecting broker-dealers can be a time-consuming task. Your Investment Advisor can perform the due diligence for you, present the findings and make recommendations to you.

  • GASB 40 Reporting Support
Your Investment Advisor can provide you the reports needed to comply with Governmental Accounting Standards Board Statement 40. (Deposit and Investment Risk Disclosures)

  • Likely Yield improvement
While preservation of principal and liquidity are the top two elements of a good investment policy, you can honor those principles completely and still have the opportunity to increase the portfolio yield through active duration management. By knowing when to buy and when to sell investments, you can often cause the portfolio to outperform current passive practice. Because of the nature of investing, there is, however, no guarantee of increased yield.

  • Increased Earnings Offset Costs
Improved earnings can help take some pressure off other revenue and expense challenges, such as public safety and rate-setting for business funds.