If people think (or know) that you have some connection to the stock markets, they do turn to you with queries. One of the questions that I am asked – for the past 3-4 years has been “Do I need to hand over my money to a Portfolio Manager?”

Whether an investor would benefit from having a PMS or not is a personal question, really. I’m no money manager. I am only a trainer – a financial domain trainer who dabbles in writing. And, in any capacity, I don’t give personal investment advice.

But like a typical teacher, I can tell you that PMS has both advantages and drawbacks.

Big and large investors used a money manager to run a portion of the institution’s money and make all the investment decisions. Until recently, individual investors could only get access to these managers if they had millions of rupees to invest.

But in recent years, the minimum investment requirements – and, just as importantly, costs – have come way down. Or so it seems.

When you open a PMS, it means you have signed a limited power of attorney to let an investment professional run your portfolio or some portion of it. Generally speaking, the manager should (will) begin by determining your investment goals, time horizon and risk tolerance.

So, typically, the portfolio of a 70 year old school teacher without children will look very different from that of a 25 year old son of a millionaire who plays baseball.

Thus you should be able the get the following benefits of having your money managed by a professional portfolio manager.

1. Custom asset allocation. The portfolio should be based on your personal investment goals, not a general strategy like “growth” or “income.” Thus the money that you need in 6 days would be in a savings bank account, money that you require in 6 months in a floater account, and money that you require in 6 years in an (say) Index fund.

2. Transparency. You should be able to see your portfolio on a 24/7 basis – all your investments should be posted to a website where you can do an analysis as you wish. The website should give your booked profit, un-booked profit, capital gains – booked and un-booked profits, current value of your investments, etc.

In case of mutual funds, you know what’s in your account only when you get the month end portfolio – but you have no clear idea when it was bought and at what price. Here you can what you own.

3. Tax management. Your portfolio can be run so that taxes are minimized.

4. Competitive fees. PMS managers charge a flat annual fee plus profits rather than a flat fee like a mutual fund. However you will still incur costs like custodian charges, administration fee, brokerage (therefore churn costs), etc.

5. Performance. PMS accounts often offer the services of top money managers with good investment systems and favorable track records.

6. Convenience. If you are too busy to give your investments the attention they deserve – or if you are an inexperienced or emotional investor – having a professional run your portfolio may be a good solution.

Of course, managed accounts have drawback too. For starters, there are all kinds of money managers: good, bad and mediocre. Clearly, it’s not worth paying for anything less than the best manager you can find.

Then there is the matter of costs. Managed accounts are generally cheaper than using a full-service broker in a transaction-based relationship. Still, no one can manage your money more inexpensively than you can on your own.

Managed accounts are generally not for do-it-yourselfers. If you enjoy the investment process, have the time and expertise to implement your own investment strategy, and are satisfied with your results, you don’t need to turn your money over to someone else to manage.

Managed accounts aren’t for everybody. However, I speak to a lot of investors who realize they could be doing a lot better than they are. They know they should asset allocate their portfolios, but they don’t. Or they aren’t sure how. They don’t want to be over- or under-diversified, but we look at their portfolios and see that they are. They know they should run trailing stops behind their stocks, but they get distracted or forget. Many of these people are smart, sophisticated investors, incidentally. They’re just too busy running a company, taking care of their families or pursuing their interests to give their portfolios the attention they deserve.

How about investors who say they can save money by doing it on their own?

“You may be able to do it more cheaply on your own,” says a fund manager. “But, remember, the most important question is not ‘what are my costs?’ It’s ‘Am I satisfied with my investment returns net of whatever fees I’m paying?’ If the job isn’t getting done, you may want some help.”

In the end, whether or not you need to consider a managed account really boils down to whether or not you prefer to grow your own tomatoes.

Some people are natural gardeners. They want to till the soil, plant the seeds, water them, fertilize them, weed them and, eventually, harvest them. When they eat those tomatoes, they have the pride and satisfaction of knowing they raised them themselves.

Other folks are uninterested, unqualified, or too busy to grow their own tomatoes.

In the end, the choice is yours.