At a time when investor wealth is eroding, having a professional money manager or advisor can be very important. There are many experts around -- some in their individual capacity, some as stock brokers, some as fund managers and some self-styled operators. It is often said that in this business there is nothing called a free lunch and no such thing as a long-term plan.
This is true because no long-term plan will survive short-term fluctuations. Most money managers do not have the experience to anticipate the fluctuations that occur in equities. If some go right, it is more because of luck rather than any skill. Therefore it becomes apparent that one needs a plan strong enough to survive on a short-term basis.
Here we come to the crucial question of performance appraisal of a money manager.
In many cases the intense application of performance appraisal techniques has actually served to impede the purpose of it
