Why do people choose a money manager for their investments? There are lots of obvious reasons; chief among them is the belief that choosing a professional brings considered and experienced opinion to your investment portfolio. You believe that it takes the hassle out of investing to get personal money management, and of course, they are supposed to know about all the great investment opportunities out there that you never knew existed. All of these are good reasons; but often, we just let the name of the job and the fancy office do the picking for us. Let’s look at some of the things we need to keep in mind picking personal money management expertise.

Be watchful for a great track record in a money manager. Some people feel that age itself is a great recommending factor in a manager. The older someone is, they tell themselves, the more wisdom they must have. Not all the wisdom in the world can make up for a little bit of track record though. If you don’t find this convincing enough, consider this example: a quarter of all the equity funds that investment houses around the country have, are run by managers who have less than two years on the job. And the funds they run consistently perform worse than the standard. Of course, finding personal money management that has that kind of track record isn’t easy.

Finding that kind of money management is difficult. Harder still though, is finding someone who beats the market in a consistent fashion. When the markets are going up, finding someone who just keeps up with his peers can be good enough. When the markets are heading south though, finding someone who beats the market can be the only way to make any kind of profit on your investments. The best you can hope for at a time like this is negative growth, only not as bad as it could be. If a manager knows how to pull this off, that would be particularly valuable counsel for you to have in an investment environment such as the one we are weathering today. If you are looking for personal money management around now, the track record rule comes with a special rider clause – try to see what the track record they have is like over the last three years alone, ever since the recession began. If they have what it takes for this environment, it’ll show. Try to see how they have performed in relation to other funds over the last three years. That should be your guide.

Hedge funds aren’t the exclusive territory of the rich anymore. And people tend to forget this. While hedge funds have arisen 10% over the last year that happens to be an industry low for these kinds of investments. Prior to the recession, they used to rise about 30% each year. But these happen to be pretty safe; the contract usually states that if the managers don’t generate for you a minimum level of performance, they don’t get paid. And that’s as close to guarantee as you could ever find in this investment environment.