Frequently Asked Questions
If you've got questions, we've got answers!
PFS stands for Personal Financial Specialist. This is the financial planning designation from the American Institute of CPAs. It indicates that the holder has passed certain exams and has certain experience that qualifies that person to offer financial advice.
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The first thing I do is compare the portfolio’s appreciation and income to a weighted average of benchmarks. For example, let’s assume the portfolio is 80% invested in U.S. stocks, 10% invested in foreign stocks and 10% invested in fixed income securities. A blended benchmark would weigh the S&P 500 Index (or perhaps the Russell 2000 Index) if the portfolio contains significant small cap stocks) at 80%, a suitable foreign index at 10% and a bond index at 10%.
Usually the last three calendar years.
I would need the annual recap from the brokerage firm for the past three years. This recap summarizes all of the activity during the year, including cash injected into the portfolio as well as cash withdrawn, all purchases and sales during the year as well as income from the portfolio.
I use Morningstar’s excellent portfolio management system as well as my own analysis.
I would recommend that you shift the portfolio away from “active” investing in individual stocks and mutual funds and towards a “passive” approach in which the focus is investing in exchange traded funds (ETFs).
An ETF, or exchange-traded fund, is similar in concept to a mutual fund in that it is really an investment in many different securities. However, what differentiates an ETF is that it invests in every single security in a given index. Unlike mutual funds, ETFs can be traded daily, although that’s not the goal. In most cases, ETFs are long-term investments in a particular segment of the market, such as the U.S. stock market.
I would suggest that you allocate a part of your portfolio to the ETF strategy, and another part to the “active” management strategy. I would help you locate an appropriate active money manager to fit your risk profile.
I charge an hourly rate or a flat quarterly rate. I do not charge a fee based on assets under management, as do many financial advisors.