Commentary – Second Quarter 2022
October 17, 2022
4 Steps to take now before Tax Day
February 13, 2023Commentary – Second Quarter 2022
October 17, 20224 Steps to take now before Tax Day
February 13, 2023INSIGHTS
Is it Time to Fire Your Financial Advisor?
Year-end can be a very busy time for numerous reasons. However, taking time out of your schedule to evaluate your financial situation can be beneficial for years to come.
A 2022 Northwestern Mutual study found that 62% of U.S. adults admit their financial planning needs improvement. However, only 35% of Americans work with a financial advisor.
Planning and Progress, Northwestern Mutual (April 2020)
Does your current advisor or investment manager clearly define how you are to evaluate their performance?
In other words, what is your benchmark? (A benchmark is a collection of indices that are weighted to match your portfolio.)
What is your relative portfolio performance versus your stated benchmark?
Assuming you are reviewing your portfolio against a benchmark, you’ll want to look at performance in relation to the benchmark, to make sure that you are measuring apples against apples.
Lastly, what is your performance net-of-fees?
An extension of the first two points, this is where you’ll want to subtract investment advisor and mutual fund or ETF fees to determine the net value of your overall portfolio performance. This is very important when comparing performance to your benchmark, i.e., is my advisor or manager adding value over what I can realistically do by investing on my own through passive investments.
If you cannot answer these questions, even approximately, it might be time to have an in-depth review with your financial advisor, or, consider moving your money to someone who can explain these topics more thoroughly.
If you do not have an advisor, here’s some things to consider:
A recent Vanguard study found that, on average, a hypothetical $500K investment would grow to over $3.4 million under the care of an advisor over 25 years, whereas the expected value from self-management would be $1.69 million, or 50% less.
What are your long-term goals for your savings?
A knowledgeable or investment manager or financial advisor can explain your options and determine a risk profile that is right for you, but you’ll want to first determine your personal objectives.
If you are close to retirement (less than 5 years), what is your current investment risk profile?
Are you currently investing?
If so, how are you evaluating investments other than if your portfolio value is going up or down?
Just like looking at cost per ounce at the grocery store, there are ways to evaluate your investments in a similar manner such as return per unit of risk.
The answers to all of the above questions are very important in determining how you are tracking toward your long-term financial goals. We offer financial reviews for those with advisors and without. Feel free to reach out with questions or to have a conversation. We welcome the opportunity to be your guide for the journey.
Eamon Capital Management, LLC (“Eamon”) is a registered investment advisor offering advisory services in the State of Pennsylvania and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training.
This communication is for informational purposes only and is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This communication should not be relied upon as the sole factor in an investment making decision.
Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any recommendations made will be profitable or equal the performance noted in this publication.
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