What would you do if $100,000 suddenly came your way? With inheritances, house sales, and lump-sum payments from pensions, that's not such an uncommon event these days. Financially, these people have instantly joined the ranks of the well-to-do. That's when they may need the services of a professional investment manager.
Take inheritances, for example. This year, up to $275,000 can be transferred free of federal tax; this figure will gradually increase, up to $600,000 in 1987 . For some people receiving windfalls like this, a financial planner may be adequate. But others may want someone with full-time investment experience and proven skills.
Finding someone with these skills can take time and research. One complication is that almost every money manager looks pretty good these days. With rising stock and bond prices, most portfolio managers have enjoyed a very good year.
So people looking for an investment manager should be on the prowl for someone who can come out reasonably well - or even make money grow - in bad years.
''Everybody's a genius these days,'' says Michael Stolper, head of a San Diego firm that matches institutions and wealthy individuals to competent portfolio managers. He likes managers who have at least 10 years of successful experience, including a respectable performance in 1973-74, the worst bear market of the last decade.
In many cases, the search may first lead you to managers with some strong - even outrageous - claims to fame.
''Beware of financial managers who claim to have 'inside information,' '' says Thomas Putnam, president of Fenimore Asset Management in Cobleskill, N.Y. He recently started working with a client whose previous asset manager ''claimed to have an inside line to the Federal Reserve and to know what (Fed chairman) Paul Volcker was going to do about interest rates.''
Beyond advice on weeding out the charlatans, there are some other tips that can lead to a good investment manager.
''I think one should look for an investment manager who's going to keep the client as informed as possible about any changes,'' Mr. Putnam says. ''I'd worry about a manager who doesn't continually ask about your goals and objectives.''
Underperforming the market, Mr. Stolper says, is one penalty for choosing the wrong investment manager. The most severe penalty, he adds, is losing most of your money. So he also advocates a lengthy process of hunting down the best professional.
Apart from friends, relatives, and co-workers who have had a successful experience with an investment manager, one place to look would be a stockbroker in your area. In most major cities, Mr. Stolper says, there are brokers who devote at least part of their time to selecting and monitoring asset managers.
Most experts recommend asking for copies of the documents filed with the Securities and Exchange Commission, including information on the principals of the firm, their education, professional training, and financial data.
The SEC documents will also describe the firm's method of analysis and its strategies, to make it easier for an investor to compare strategies of competing firms. Some of them, for example, may have more aggressive investment philosophies, or they may have different attitudes toward diversification.
A firm investing in only a few stocks at a time, for instance, may be able to take important positions in those stocks and realize a substantial gain when one of them goes up. Of course, a dramatic drop in the price of a stock can also result in a dramatic drop in the value of your portfolio.
Whatever, a prospective customer should insist on meeting with the person who will be directly responsible for his money. The manager should be aware of your age, financial goals, tax bracket, and any special investment criteria you may have, such as a preference that your money not be invested in certain industries.
As for fees, which Mr. Stolper says ''are only significant of the manager does a poor job,'' they can range from one-half percent to 1 percent and as much as 3 percent of assets.