In recent years, we’ve seen an influx of people needing a second opinion on their investment plans, so I thought it would be helpful to provide you with my top 6 signs that you might need a second opinion. While this list is certainly not designed to be all encompassing, it should allow you to take inventory of where you’re at right now.
1. Does your portfolio consist of only stocks, bonds, or mutual funds? Much has been written about the successful money management of Yale, Harvard, and Princeton. Interestingly enough, these endowments have very little in stocks or bonds. Yale’s most recent allocation has 16 percent in equities and 4 percent in bonds/cash. Proactive advisers should look for ways to imitate or improve on Yale’s success utilizing alternative investments that provide insulation from market and bond volatility.
2. When was the last time your adviser and attorney met to discuss your estate plan? Good wealth advisors will work closely with the other professionals in your life to make sure money is not falling through the cracks.
3. Do you have a diversified investment strategy to protect you from inflation? Many (including me) believe inflation is going to be a real threat in the near future. Your portfolio should address the devastating effects of inflation to protect your purchasing power.
4. Do you have investment losses you haven’t used up on your tax return? All too often we come across new clients that still have large carry-over losses from 2008. Since you can only deduct a small amount of losses each year, it’s imperative that you include a strategy with the goal to generate capital gains and use up as much losses as possible.
5. Are you currently paying a management fee on a portfolio of mutual funds? Why pay a manager to “manage” other money managers? This is truly a duplication of effort that results in exorbitant fees.
6. Do you understand that rising interest rates can cause bond investors to lose money? Bonds are near a historic high, and with interest rates at historic lows it won’t take much interest rate movement to destroy considerable wealth in fixed-income investments.
Robert Russell is CEO & CIO of the Ohio-based Russell & Company, a private wealth management firm specializing in helping affluent individuals ages 45 and up create and preserve their wealth. He co-hosts a radio show, authors The Rob Report blog, and is a frequent contributor to FOX Business and CNBC.
Securities offered through Kalos Capital, Inc., Member FINRA, SIPC. Investment Advisory Services offered through Kalos Management, Inc., 3780 Mansell Rd. Suite 150, Alpharetta, GA 30022, (678) 356-1100. Russell & Company is not an affiliate or subsidiary of Kalos Capital, Inc. or Kalos Management, Inc.
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TJ of NY 1:02AM March 16, 2012