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First Portfolio Review with New Financial Advisor

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  • #16
    Originally posted by Andrew Musbach View Post
    5 months is too short of a time period to judge performance (whether that's someone managing their own investments or an advisor managing them). Any strategy can look good (or bad) over a period of time that can lead people to the wrong conclusion. This is true for managing a portfolio or an individual investment. Look at ARKK - up 152.82% and one of the best investment funds in 2020. Down 16.21% in 2021 and one of the worst performing funds. Is this a good or bad fund?

    If you post the investments in your portfolio, you'll get feedback on the overall allocation/mix of investments. The bigger thing I'd want to focus on is the underlying philosophy, and if you agree with the approach, versus the returns over a short period of time. For instance, is the approach that they try and actively manage the portfolio (pick stocks, certain investment funds over time, time the market, add alternative investments, etc.) or is it more of a passive approach (use index funds, stay disciplined to an allocation, etc.).

    Everyone has their own approach they buy into. Anyone can give you an explanation around performance and create a narrative that sounds compelling. Whereas having someone explain their approach is where I think you'll get a better feel for if you buy into it. I just think you'll be better off (and feel more confident) if you understand the way they are investing for you and why that's the best long-term approach.
    But would you put someone into a portfolio they wouldn’t understand? Even if the portfolio is totally reasonable, having someone invest my money without having some fundamental understanding of what it’s in seems to be a bad financial advisor. It’s possible someone can’t or doesn’t want to understand, but it doesn’t sound like that is OP.


    • #17
      No, I wouldn’t. We have an “easy” to understand portfolio and make sure people align with our approach before investing. I’m not trying to defend the advisor, but a lot of people that hire an advisor don’t want to fully understand the details of the investment portfolio (which is a part of why they hire an advisor). They just want to trust the person investing their money. My point was around the problem of looking at short-term performance as the gauge (with or without an advisor).
      Andrew Musbach, CFP® | Co-Founder & Financial Advisor at MD Wealth Management, LLC | Podcast Host - The Physician's Guide to Financial Wellness