This is the first article in a twice-monthly new series from Mitch Zacks answering your individual portfolio related questions.

This week, Orlando, FL asks “Can an Advisor Manage Better than Me?”

I don’t like to answer a question with a question, but in this case you might ask the four questions below to gauge if an advisor might do a better job managing your investments:

1)      What is your long-term track record? It’s quite possible – and perhaps likely – you can outperform your advisor in a given year. You pick good stocks, buy and sell at advantageous times, post a good return. But, the real question (and what matters most to investing success) is – can you string together your successes over 10, 15, or even 20+ years to generate a competitive long-term return? If you don’t have a long-term track record, but your advisor does (and it’s strong), you might consider being partial to the value of his or her proven experience.

2)      Do you have a habit of selling stocks during periods of volatility? I can’t tell you how many times I’ve seen investors sell in a market choppy market, even when fundamentals were strong. This often cause a lot of self-inflicted financial pain. A good advisor is trained to focus on the long-term and avoid acting on emotion. In that sense, he or she can be useful in preventing you from making emotionally-driven investment decisions that can adversely impact your total return over time.  

3)      Do you have a disciplined investment strategy that’s based on extensive quantitative research? Making informed investment decisions involves much more than using the news or financial publications as sources. Your advisor will have a research team (if they’re good) that is constantly evaluating the markets and making decisions over time – ones that result in competitive long-term returns. Would you have a similarly robust research process available to drive your portfolio strategy? If not, then your advisor can likely manage better than you.

4)      How much time can you devote to managing your portfolio? Your advisor’s full time job is to monitor the markets, review your goals and objectives and manage your portfolio accordingly. If you spend as much time, or more, managing your own portfolio, then doesn’t that also mean you’re sacrificing some of the retirement benefits you’ve worked so hard for? Managing your portfolio full-time is almost like taking-on another full time job, which kind of defeats the purpose of retirement.

Bottom Line For Orlando, FL (and others with the same question!)…

I think a majority of retirees – who didn’t spend their careers in the financial industry – could benefit from the help of an experienced investment manager. The key is to remember that, if your objective is to make your assets grow and work for you over the course of your retirement life, the amount of investment decisions you’ll need to make along the way are not only numerous, but also very complex. The proven experience of an advisor can go a long way.     

– Mitch


Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

Zacks Investment Management, Inc. is a wholly-owned subsidiary of Zacks Investment Research. Zacks Investment Management is an independent Registered Investment Advisory firm and acts an investment manager for individuals and institutions. Zacks Investment Research is a provider of earnings data and other financial data to institutions and to individuals.

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Disclosure

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

Zacks Investment Management, Inc. is a wholly-owned subsidiary of Zacks Investment Research. Zacks Investment Management is an independent Registered Investment Advisory firm and acts an investment manager for individuals and institutions. Zacks Investment Research is a provider of earnings data and other financial data to institutions and to individuals.

This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional legal, tax, or accounting counsel. The information contained herein has been obtained from sources believed to be reliable but we do not guarantee accuracy or completeness. Publication and distribution of this article is not intended to create, and the information contained herein does not constitute, an attorney-client relationship. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole.