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How to Choose an Asset Manager or an Independent Investment Consultant: A Complete Guide

Financial markets are a complex system where success depends on experience, knowledge, and discipline. However, not every investor is willing to analyze the market independently, monitor macroeconomic factors, and develop strategies. That is why many seek help from asset managers or independent financial consultants.

But how do you avoid making a mistake and not fall into the hands of fraudsters or incompetent specialists? In this article, we will explore key criteria to consider when choosing a financial expert and highlight common mistakes made by inexperienced investors.

📌 Why Long-Term Results Matter More Than Short-Term Gains

One Lucky Trade Does Not Make a Professional

Beginners often look at profitability over the past month or quarter, assuming that if a manager has shown high returns, they must be skilled. However, the market does not work in short-term cycles.

If short-term profitability mattered, casinos and lotteries would be the safest investments.

In reality, sudden spikes in profits often indicate excessive risk-taking rather than expertise. Many so-called “managers” make aggressive trades using high leverage. As a result, when market conditions are favorable, their returns can exceed 100-200% per month, but once the market turns against them, they lose everything in a matter of days.

How to Properly Assess Profitability?

✔ Look at statistics over 3-5 years. If the manager consistently delivers 10-30% annual returns without major drawdowns, that’s a positive sign.
✔ Evaluate performance during crises. How did they manage risk during events like the 2020 COVID crash or the 2022 energy and geopolitical crisis?
✔ Analyze how profits were generated. If the manager earned most of their profits from a single trade, it could just be luck.

🚨 Red Flag: If someone claims they have a “unique strategy” that consistently delivers 50-100% monthly returns, you are likely dealing with either a scam or someone on the verge of losing everything.

📌 Money Management – The Key to Capital Preservation

What’s More Important: Making Money or Not Losing It?

One of the biggest mistakes beginner investors make is chasing maximum profits without considering risks. In reality, knowing how to AVOID losses is far more important than knowing how to make gains.

"A professional investor protects capital first, then thinks about profits."

🔥 What Should a Good Asset Manager Consider?

✔ Diversification – They don’t put all their capital into one asset but spread investments across different instruments.
✔ Risk Limits – Every trader should have stop-losses and a clear understanding of their maximum acceptable losses.
✔ A Clear Trading Plan – They should know in advance under which conditions they will exit a position.

🚨 Red Flag: If a manager says, "The market will turn around; just hold on", this is dangerous thinking. A true professional follows a structured system, not emotions.

📌 Financial Literacy and Transparency

How to Verify If Someone Is a Fraud?

A professional asset manager or consultant will not hide their trading history and performance statistics.

✔ They can clearly explain their strategy and trading methods.
✔ They provide full information, not just successful trades.
✔ They never promise guaranteed profits (there are no guarantees in investing).

🚨 Red Flag: If someone says “We guarantee 50% returns” or “There are no risks”, you are dealing with a scammer.

📌 Types of Investment Strategies and Who They Are Suitable For

1️⃣ Conservative Strategies

💼 Best for: Investors who want minimal risk and are not willing to endure large drawdowns.

✔ Investments in bonds, index funds (ETFs), gold, and real estate.
✔ Expected annual return: 5-15%.
✔ Maximum drawdown: 10% or less.

2️⃣ Moderate Strategies

💼 Best for: Those who accept moderate risk for higher potential returns.

✔ Investments in dividend stocks, ETFs, and some exposure to crypto.
✔ Expected annual return: 15-30%.
✔ Maximum drawdown: Up to 20%.

3️⃣ Aggressive Strategies

💼 Best for: Investors who can tolerate high risks for high potential rewards.

✔ Investments in cryptocurrency, speculative stocks.
✔ Expected annual return: 30-100% (or more), but with a high chance of losses.
✔ Maximum drawdown: 30-50% or more.

🚨 Important: Never put all your capital into a single strategy. Diversification is key to risk management.

📌 Alternative: ETF Investing and Copy Trading

ETF Investing – A Solution for Everyone

ETF (Exchange Traded Funds) allow you to invest in dozens or even hundreds of assets at once.

✔ No need for active management.
✔ Lower risk compared to individual stocks.
✔ Average return: 8-15% per year.

🔹 Best ETFs for Beginners:
✅ SPY – S&P 500 Index
✅ QQQ – Tech Sector ETF
✅ VT – Global Stock ETF

🚨 Who It’s For: Those who want to invest for 5-10 years and earn stable, long-term returns.

Copy Trading – Investing in Professionals

Copy trading is an automated system that copies the trades of experienced traders.

✔ Available on crypto exchanges (Binance, eToro, OKX).
✔ Allows beginners to leverage professional expertise.
✔ Investors can choose traders based on past performance and risk level.

🚨 Copy Trading Risks:
❌ Choosing the wrong trader (if they lose money, you do too).
❌ High fees (many platforms take a percentage of your profits).
❌ Delayed trade execution (entry points may not always be optimal).

🔹 Advice: Pick traders with annual returns of 10-30%, not those promising 500% per month.

📌 Conclusion: How to Choose an Asset Manager?

🔹 Check their performance over 3-5 years.
🔹 Analyze their money management and risk policies.
🔹 Never trust "guaranteed returns" – they don’t exist.
🔹 Invest only through regulated funds and platforms.
🔹 Diversify your portfolio – don’t put all your eggs in one basket.

💡 Final Thought: Nobody cares about your money more than you do. Even if you trust an expert, educate yourself on investing basics to understand what is happening with your capital.

🔹 If you have questions, Ronin Academy offers expert consultations to help you navigate investments and risk management. Be cautious and invest wisely!