Key Questions HNIs Should Ask Before Choosing a PMS

For High Net-Worth Individuals (HNIs), choosing a Portfolio Management Service (PMS) is not just an investment decision—it’s a long-term partnership. A PMS manager is entrusted with significant capital, strategic discretion, and the responsibility of navigating complex market cycles on your behalf.

Before signing a PMS agreement, asking the right questions can make the difference between sustainable wealth creation and avoidable disappointment. Here is a clear, investor-first checklist every HNI should go through before committing capital.

Figure: PMS strategy and risk evaluation

1. What Is Investment Philosophy—and Is It Clearly Defined?

A credible PMS operates with a repeatable philosophy, not ad-hoc stock picking.

Ask:

• Is the strategy growth, value, quality, or a blend?
• Is the approach cyclical or long-term?
• How does the manager behave in bull vs bear markets?

A vague answer is a red flag. Strong PMS firms articulate why they invest, not just what they invest in.

2. How Is Risk Defined, Measured, and Managed?

Returns attract attention. Risk determines survival.

Key questions:

• What is the maximum historical drawdown?
• How is downside risk controlled?
• Are stop-losses, position limits, or diversification rules used?
• How does the portfolio respond during sharp market corrections?

A PMS that cannot explain risk management in simple terms may be taking risks you don’t fully understand.

3. Who Is Making the Investment Decisions?

Understanding who manages your money matters as much as how it is managed.

Clarify:

• Is there a single fund manager or an investment committee?
• What is the team’s experience across market cycles?
• Is decision-making discretionary or model-driven?

Experience through volatility is more valuable than performance in a bull market.

4. Is the Track Record Transparent and Comparable?

Past performance is not a guarantee—but transparency is non-negotiable.

Ask for:

• Audited or broker-verified performance
• Performance across different market cycles
• Comparison against relevant benchmarks
• Portfolio-level returns, not cherry-picked stock stories

Be cautious of overly smooth return charts—they often hide risk.

5. How Aligned Are the Incentives?

Alignment of interest separates serious PMS providers from sales-driven ones.

Important points:

• Is there a performance fee?
• Is it based on absolute returns or high-water mark?
• Are fees charged during drawdowns?

A well-structured fee model ensures the PMS earns with you, not from you.

6. How Concentrated Will My Portfolio Be?

Concentration can create alpha—but over-concentration can destroy capital.

Understand:

• Number of stocks typically held
• Maximum exposure to a single stock or sector
• Flexibility to hold cash during uncertain periods

There should be a clear rationale behind concentration levels, not just conviction.

7. How Liquid Is the Portfolio?

Liquidity is often overlooked—until it matters.

Ask:

• Are investments primarily in liquid listed equities?
• How long would it take to exit the portfolio?
• Are small-cap or micro-cap exposures capped?

For HNIs, liquidity is a risk management tool, not an afterthought.

8. How Often Will I Receive Reporting and Communication?

Transparency builds trust.

Clarify:

• Frequency of portfolio statements
• Depth of reporting (holdings, attribution, commentary)
• Access to the investment team during volatility

Silence during market stress is a warning sign.

9. What Is the Expected Investment Horizon?

A PMS is not meant for short-term capital deployment.

Ask:

• What is the minimum recommended holding period?
• How should investors evaluate performance—yearly or cycle-wise?
• What kind of volatility should be expected along the journey?

Misaligned time horizons often lead to dissatisfaction, even with good strategies.

10. How Does the PMS Adapt to Changing Market Conditions?

Markets evolve. Strategies must too—without abandoning discipline.

Understand:

• How macro factors are incorporated
• Whether portfolio construction changes with market regimes
• How data, research, or analytics support decisions

Rigid strategies fail. Overreactive strategies fail faster.

Figure: PMS strategy, risk, and reporting

Final Thought: Choose Process Over Promises

A PMS agreement should be signed after clarity, not excitement.

• Speaks more about process than predictions
• Prioritizes risk before returns
• Communicates clearly during uncertainty
• Aligns long-term wealth creation with capital protection

For HNIs, the goal is not just to grow wealth—but to grow it responsibly and sustainably.

At Waya Financial, our PMS philosophy is built around disciplined processes, deep research led investment framework, transparent communication, and institutional-grade risk management—designed for investors who value consistency over noise.

If you’d like to understand whether a PMS structure is right for your portfolio, we’re happy to have a conversation.