Has Your Financial Advisor Filled Your Portfolio with a bunch of @#$!%?
As investors relying on our advisor's advice, we never want to think that he or she has not served us well, every time. But the reality is, the financial services landscape is littered with questionable intentions and reasoning, especially when it comes to building portfolios. The unfortunate reality is many types of financial advisors are incentivized to put their own interests above yours. The question is, how do you better understand what you own in your portfolio in order to feel confident that your portfolio is serving you well?
Portfolio Analysis 101: Good and Bad Portfolio Construction
The foundation of sound portfolio construction starts with a your financial plan. A financial plan you say? Yes, indeed, a thoughtful and well-conceived financial plan should drive the design of your portfolio. In practice, however, we often find that financial advisors fail to build financial plan that is thorough enough to help with portfolio construction. Far too many financial plans are created solely to help the advisor understand where there is opportunity to sell the firm's proprietary products and services. On the contrary, an objective analysis is the cornerstone of a good plan and when done properly, the results yield a very clear picture of how you should position every last penny of your assets.
Questions to Ask of Your Financial Advisor
When you look at your monthly statements or log in online to view your portfolio and can't recognize your holdings, it's time to start asking questions of your financial advisor. Don't sound the alarm bells just yet, though, because part of the reason you have hired a professional in the first place is to bring to the table appropriate investments for which you may not have prior knowledge.
Asking your advisor for a full explanation of why and how your portfolio looks the way it does not asking too much; it's simply adding to your understanding of what you actually own. For a complete list of questions to ask your financial advisor during a portfolio review, click here to download our white paper entitled: "Has My Advisor Filled my Portfolio with a Bunch of %*@#?"
Get a 2nd Opinion
In sum, portfolio construction is hardly ever a black and white subject; there are many ways to build a sound portfolio. Working together with your advisor to understand and craft the best portfolio for your needs is the ultimate goal. If the review and discussion with your current advisor does not measure up, then consider getting an objective, 3rd party review of your holdings. Having a second set of professional eyes look at how you are currently positioned can go a long way in helping you understand whether you have a quality portfolio or not.
If you are interested in our complimentary portfolio analysis, please click here to schedule an initial phone consultation:
At Infinium, we believe in providing you original research and thoughts on the world of personal financial services. Nothing of what you see on our site is canned or produced by a 3rd party. Take some time to explore the following resources:
- Has My Financial Advisor FIlled My Portfolio with a Bunch of !@#@$#>? [white paper]
- When and How to Leave Your Financial Advisor [white paper]