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Who Selects the Investments for my Portfolio?

Who Selects the Investments for my Portfolio?

Selecting investments is an important part of planning for your financial future. As Financial Professionals, we generally take the lead in picking stocks for your portfolio. However, we do our best to work alongside you and take your preferences into account when choosing your investments. After all, it is your future we are planning!

If you are emotionally invested in a certain stock, you should certainly feel comfortable bringing it to the attention of your advisor. We’ll discuss your attachment to the stock and evaluate, from an objective viewpoint, whether or not it’s a good fit for your portfolio. 

While we welcome your input and do our best to keep you informed, investment selection is still largely the responsibility of your Financial Professional. Here are a few good reasons why you really want a wealth management professional in the driver’s seat when it comes to your investments.

We choose investments that pair well together

Anyone can read a few articles and learn the basics of choosing good stocks. And it’s not a bad idea to spend time learning this skill. If nothing else, it will help you better understand the terminology your advisor uses when discussing your investments. However, there’s more to selecting investments than just picking ones that are performing well. The stocks you select must perform well together and complement one another.

As wealth management professionals, we are trained to do a lot more than select individual, well-performing stocks. We know how to look at your whole portfolio and choose stocks designed to work well together. We like to say we choose stocks that “play well with each other in the sandbox.” In other words, just because a stock is highly rated does not mean it’s a good choice for you, personally. Your financial advisor can do a better job of choosing stocks that are a good personal fit.

We’re emotionally neutral

Often when clients come to us with interest in a certain stock, it’s because they are emotionally invested in that stock. Perhaps there is a new, green energy company whose mission really aligns with the client’s ethics. Or maybe you’ve stumbled on a food company whose cookies you love, and you feel drawn to invest.

There is nothing wrong with being passionate about your investments. In fact, we wish more clients were passionate about the stocks they own. However, when you invest for emotional reasons, there is a tendency to overlook red flags or to over-value the stock.

Discussing the stock with your financial advisor helps these red flags not go overlooked. As wealth management professionals, we are not emotionally invested in the stock. We’ll look at the earnings reports and various metrics and give you an honest, unbiased assessment of whether or not the stock fits into your portfolio. 

When people do build their own investment portfolios, they tend to do it with a lot of emotion involved. It’s hard not to be emotional when investing your own money; it’s only human nature. Our training has helped us to help you make investments objectively. While we take feelings into account, we aim to build portfolios primarily based on facts.

We keep your future goals in mind

A certain stock might be a great choice for someone whose goal is to retire in 10 years, but a very poor choice for someone who’s retiring in 2 years. Choosing the wrong investments could delay your retirement plans or mean you’re unable to retire the way you prefer.

We always work closely with our clients to hone in on their future goals. Then, we select stocks designed to help them meet those goals. The stocks we select for you may be entirely different than those we select for a client whose goals are different from yours. In other words, choosing investments is about a lot more than picking a “good stock.” It’s about picking stocks that will help you meet your own unique goals.

If you do come across a stock that you think aligns with your future goals and plans, you are welcome to bring it to your advisor’s attention. However, your advisor will not — and should not — simply add it to your portfolio. Instead, you can expect them to research the stock and discuss with you how adding it to your portfolio may affect your future goals, either in a positive or negative way. From there, the decision of whether or not to add the stock to your portfolio can be made collectively.

We have years of training and experience

There is a lot of information about investing available on the internet. Unfortunately, not all of that information is factual, reliable, or even correct. We don’t want to deter you from reading and learning about investing. However, it is important to distinguish between what you can learn by casually reading on the internet, and what wealth management professionals learn in their formal training. 

As Financial Professionals, we also have years of hands-on experience. This, along with our formal education, has prepared us to make smarter, more informed investment decisions. We know it can be hard to let someone else make monetary decisions for you. Just remember: you’re trusting a professional to invest your money because they typically have much more experience and can select investments in conjunction with your goals.

Nobody can know everything. You may know your field well, but we’ve spent years studying our own field of investments. And doesn’t it seem wise to have someone who has studied the field manage your portfolio?

We adjust your portfolio accordingly

Your life is always flowing and changing. The world is always flowing and changing. There are always local, national, and world events affecting the stock market. Also, as your goals change, the types of investments in your portfolio may need to change in response.

When you rely on a Financial Professional to choose your stocks, we monitor these ever-changing factors, both in the world and in your personal life, and we adjust your portfolio accordingly. This requires a lot of attention and constant interaction. It’s not buying and selling stocks willy-nilly. It is constantly assessing your needs, how they’re changing, how the stocks are changing, and then acting responsibly according to all the data we’re taking in. It can be difficult to tell when to buy or sell, but our experience can help us make the decisions appropriate for your portfolio.

Letting someone else manage your investments can feel a little uncomfortable at first. However, financial professionals are specifically trained to select investments based on your needs.

This does not mean you cannot be involved. Your financial advisor can explain to you why they’re selecting certain stocks for your portfolio. They can also look into additional stocks you may be interested in and give you personalized feedback. At the end of the day, though, there is a reason you’ve hired a professional. They’re uniquely qualified to make smart, objective investment decisions that propel you towards your future goals. 

Smart investing is about building and maintaining a balanced portfolio that works for you. If you’re looking for a wealth management professional who will work with you to define your goals and invest to meet them, contact RLJ Wealth today.

Disclosures:

Investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear the loss, including the total loss of principal.

Diversification and asset allocation strategies do not assure a profit or protect against loss.