Portfolio Management
Why the Traditional Approach has Failed
The first time you walk through the door at other firms, investors are often asked to fill out a risk assessment. The investor self-assesses how much risk they prefer. A score is given. The investment advisor recommends a set of investments. And they call it a day.
The investor often fills out that risk assessment based on how they feel. Feelings change from minute to minute. If the investor is assigned a conservative score, they get a conservative investment. But what if the investment is too conservative? Then the investor takes on the risk of not keeping up with living expenses over time. After all, a stamp cost 13 cents in 1974, and today it’s over 50 cents. Will their hyper-conservative portfolio keep up? Likely, no.
This approach is short-sided, one-dimensional, and oftentimes will help the investor fail.
Portfolios Built with You in Mind
At The Retirement Planning Group, we absolutely take into account your attitudes toward risk, but we cross-reference that with the plan we’ve built for you.
If your plan dictates that we need 60% of your investments to be in stock and 40% in bonds, that will be the starting point of the conversation. Your plan (based on 100+ years of return probability) will dictate the allocation, not how any of us are feeling on a certain day.
We’ll take that allocation further and customize it to make sure we have the perfect amount of cash in the accounts at all times, substitute recommended positions for the investments you already own and assign different allocations for different types of accounts (IRA vs Trust vs Roth IRAs).
So what does this mean for YOU and your portfolio?
At the end of our meeting, you’ll end up with a beautifully diversified cost-effective portfolio, with the right allocation of stock and bonds, structured in a tax-efficient way and in line with your overall plan.
It won’t be based on a stapled-together two-page risk assessment profile filled out in the lobby five minutes before you meet with an advisor.