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Portfolio Analysis: Your Financial Advisor's Investment Choices

03.01.2015

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:

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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:


Three Types of Financial Advisors

02.12.2015

Insurance Agents

"Buy term and invest the rest!" goes the saying. And for good reason: using an insurance agent is fraught with risk that you will end up with too many expensive insurance products in your portfolio. Insurance can be an incredibly useful tool if the benefit it offers you matches your specific need. Unfortunately, insurance agents are paid handsomely to recommend high fee products which aren't necessarily the best solution. Buyer beware when relying on your insurance agent for financial advice.

Brokers

The traditional stock broker of yesterday is still alive and well in today's personal financial services marketplace, and that's not necessarily a good thing. 

Technology has displaced brokers who used to be the only entrée into Wall Street for investors. Now, virtually the whole universe of investment products and solutions are available with the click of a mouse button. Similar to insurance agents, brokers are not required to put your interests first, and this can lead to much higher fees and sub-optimal portfolio performance. Too, their platforms, although more open today than ever before, are littered with proprietary products like Structured Notes, that may have questionable benefit to you. 

Registered Investment Advisors

RIAs have been around for many years, but only recently have taken the spotlight as many brokers have made the move to become an RIA after the global financial crisis. An RIA is a fiduciary to their clients, and must always put a client's interest above their own. If given the choice, why wouldn't you want the peace of mind knowing that you are receiving honest and objective advice, and not the "hot dot" investment product. 


 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. To learn more about the three different types of financial advisor, take some time to explore the following resources:

Registered Investment Advisor as Financial Advisor [Part 3]

02.06.2015

Registered Investment Advisor (RIA) as a Financial Advisor [Part 3] 

RIAs are the fastest growing segment of advisor types, and for good reason. Many current brokers are leaving their posts to join the ranks of RIAs for the ability to better serve clients. Their primary objective is to provide the very best solution every time. Advances in technology now allow even smaller RIAs to offer all of the products and services that previous were only attainable through larger firms.

Executive Summary: Fiduciary for Your Funds

Like doctors, CPAs and attorneys, an RIA is a fiduciary, and therefore required by law to always put your interests before theirs. They typically offer a comprehensive solution that is not tied to one company, but rather, draws from the very best the marketplace has to offer.

Bottom line: RIAs deliver the most value by acting as fiduciaries for their clients.


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:


Broker as a Financial Advisor [Part 2]

02.06.2015

Broker as a Financial Advisor [Part 2] 

The financial services landscape is filled with different types of providers all more than ready to advise you on your money. Brokers are the traditional way that consumers have accessed investment advice.

Executive Summary: Looking Out for #1

Brokers of today are only beholdened to offer you a suitable investment. They are not required to always put your best interests first and can make more compensation on their proprietary products thereby possibly creating a conflict of interest. They typically offer more transaction-oriented products than comprehensive financial planning.

Bottom line: Brokers all too often favor themselves over clients.


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:

Insurance Agent as a Financial Advisor [Part 1]

02.05.2015

Insurance Agent as a Financial Advisor [Part 1] 

The financial services landscape is filled with different types of providers all more than ready to offer you advice on your money. Insurance Agents used to have a fairly narrow focus, but more and more, they are beginning to offer a broader range of investment products.

Executive Summary: Hire an Expert

The saying goes, "If you need brain surgery, hire a brain surgeon!" The same can be said for your financial advisor; you want an expert helping you to make some of the most important financial decisions you will ever have to make. An insurance agent is an expert at insurance, not as a financial planner and investment manager! 

Bottom line: Buy insurance from an insurance agent and nothing else.


 

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:


 

Market Update: November 2014

11.12.2014

After nearly a six-year run higher from the depths of the Financial Crisis of 2007-2008, the stock market continues to defy gravity. This month's update focuses on several interesting, and somewhat counter intitutive points about where we are and where we are headed.

Medicare Benefits Update for 2015

11.03.2014

The Social Security Administration recently published their annual update to Medicare. For 2015, notable changes include cost increases across the board for Part A (hospital insurance) and Part D (perscription drug coverage). Those on Medicare receive some reprieve from the higher cost as Part B (medical insurance) avoided any increase for 2015.

Social Security Benefits Update for 2015

11.03.2014

The Social Security Adminstration has recently released the annual update to its programs. One of the most anticipated numbers is the Cost-of-Living adjustment that impacts all persons currently receiving benefits. Given the rather anemic rate of inflation in our economy over the past several years, it's a wonder retirees are getting any increase, let alone a bump higher by 1.7%!

Infinium's Mark Starosciak Was Interviewed by Local Denver T.V. Station Today

08.14.2013

Fox 31 News Denver stopped by Infinium's office today to speak to me about the ever-rising cost of raising a child. After reading over the USDA report, the most shocking fact was the $250k+ number they quoted up to age 18 didn't even include the cost of college! So tack on an additional $50-$100k in today's dollars (or even more for out-of-state or private) and you come up with a really big number. 

One of Our Smartest Money Managers Knows He's Smarter Than Ben Bernanke

06.19.2013

Michael Aronstein is one of our favorite money managers mostly because he is so pragmatic and debunks a lot of the myths in the financial markets. He tries to pay attention to only those data points that matter, and forget about everything else. He has a venerable track record and is always full of tons of market wisdom. The link below is to an interview he recently gave to Bloomberg where he lays out the case for why the Fed is always behind the curve and is a lagging indicator, not a leading indicator of what is to come: