Sylvester Knox
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Sylvester Knox

How Often Should Your Adviser Update Your Portfolio?

Personal financial advisors are responsible for maintaining portfolios for a variety of investors. Part of their due diligence is to periodically review customer portfolios to ensure they are appropriate for specific and personal goals. Essentially, there are only a handful of conditions that result in updating a financial investment portfolio.

New Financial Goals

There are a multitude of investment vehicles that are suitable for unique investors and their respective goals. For example, retirement savings accounts hedge on a diverse but moderately conservative investment mix. Commodities and precious metals would not be recommended as a suitable investment for a retirement account.

Similarly, college savings accounts offer more flexibility for growth. Accounts that will grow for more than ten years before the first expected withdrawal are considered long term investments. When an investor experiences an event that shifts their priorities for saving, such as adding to the family or a move into real estate investing, the entire portfolio may benefit from a review.

Updated Risk Tolerance

Certain events alter investment goals, especially retirement plans. Marriage, divorce, layoff, and change of employment are all factors that could potentially increase or reduce the expected income in retirement. As these factors change, an investment portfolio may require a second look. Sometimes, an investor has more personal reasons for changing their outlook.

These subjective events may affect both their style of investing and their life in general. At any rate, if an investor can no longer tolerate the risk associated with investing in a particular stock or other investment vehicles, their investment portfolio should be updated according to their new preferences.

Widespread Economic Changes

A prolonged recession or depression, and even a global pandemic, can cause alarm for some investors. In much the same way other events can impact investors’ comfort level, widespread economic changes can heavily impact an investor’s style of investing. Ideally, an investment portfolio should not change frequently based on external events. A qualified financial advisor establishes an investment mix based on criteria the investor sets. However, if world events have caused or are expected to cause long term market instability, investors may request a change to their investment strategy.

Originally published: https://sylvesterknox.net/how-often-should-your-adviser-update-your-portfolio/

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Sylvester Knox

Sylvester Knox is the President & CEO of the Knox Group Investment Advisory Firm | http://SylvesterKnox.org