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Scott Thomas, ChFC®, CAP®, CKA®, RICP®

Asking Better Questions Regarding Your Investments

I was asked this week by a stranger "how many stocks should I own in my portfolio?"  Seems like reasonable question however there are a lot of things to discover first. What is your time horizon for the money? Do you have stable income sources or appropriate stable money to weather a major economic downturn? Have you invested into stocks in the past and how did you feel with the markets declined? What is your registration or the type of bucket your holding stocks into? Is it qualified money (IRA, ROTH, 401K)? Is your main objective strong growth or are you trying to growth money while not being surprised by significant down turns?

Each of these answer unlocks various possabilities and should also open a dialog to risk scoring or look at historical returns and risk of investment bucket similar to risk indicated. 

Another really popular question that surfaces quickly is "what are your fees to handle my portfolio?" This is important question but is jumping ahead a little focsed on quantity and not addressing quality of advice and other services rendered. Are there expectations for wisdom and coordination of benefits and tax planning involved in the overall process? Are you expecting advisor to time the markets and get you out of risk and back in befor the market rise again? Are you expecting to better the returns of broad market indexes like the S & P 500?  If so, have you gain clarity on the risk and what is expected? Have you ever looked at the advisor fee schedule and done the math of your holdings to determine if the quoted rate is a "FLAT" percentage or "TIERED" percentage rate? Video on the differences here.

After risk and time horizon and expections are on the table here are some better questions:

What process is applied to my investment holdings and what keeps that process in check?

Would this investment potentially provide "tax optimized result" and not just a tax break for today?

When comes time to convert my growth investments to income investments what approaches do you currently recommend for your clients and why?

What restrictions or potential costs would I incur if I decided to change my investments?

Explain to me passive and active management differences and when each is appropriate to utilize?

What will you provide me to show me how my investments are proforming and what benchmark are comparing the portfolio and are these results net of fees?

What planning services do you routinely provide to your current clients and tell me a little about how that may be of benefit to me?

Many questions are based on a static or fixed moment in time and life and planning changes and looking ahead and creating flexible options to change matters so ask more questions.

 

Check the background of this financial professional on FINRA's BrokerCheck
Check the background of this financial professional on FINRA's BrokerCheck