Common Portfolio Wisdom – PROFESSIONAL MANAGEMENT = BETTER RETURNS

 

Michelle Bertram and Beverly Bertram are financial advisors living in Mineral Point WI and serving the surrounding communities. Michelle Bertram does financial planning for retirees along with business consulting. Beverly Bertram specializes in retirement planning and income planning for her clients. Michelle Bertram and Beverly Bertram are authors of the book, Creating You DREAM Retirement and creators of the DREAM Retirement Process. Serving Madison WI, Verona WI, Mount Horeb WI, Barneveld WI, Dodgeville WI, Dubuque IA, Platteville WI, Lancaster WI, Cuba City WI, Fennimore WI, Darlington WI, Monroe WI, Spring Green WI, Black Earth WI and beyondPros –

Better potential long-term results if properly tactically managed in today’s market.

Cons –

Styles such as asset allocation and modern portfolio theory, systems, methods, and experience are still subservient to market trends.

Axiom – Opinions don’t count; market trends do.

Cheaper doesn’t always mean better. Just in the same way, more expensive doesn’t always mean the best quality. It’s getting value for what you’re paying for.

A lot of times, we see people paying these high investment fees to advisors or money managers and yet, they don’t know anything that that advisor or money manager is doing for this fee. They’re not getting valuable service for it.

It reminds me of paying a teenager to mow my yard this summer. We set a price and overview of what is expected, but when I came home, and he had botched the yard. It took me longer to clean up all the grass because he cut it so low than it did for him to mow. That’s not a valuable service. Why would we want to pay for somebody to do something that they really didn’t do or they’re not doing well?

When it comes to costs, we want to make sure the costs are reasonable and that we’re not paying for things that we don’t need, but we also want to make sure we’re getting value for what we’re paying for. If you don’t know what you’re paying for, it’s something that you need to be able to ask and receive an answer to what all the fees cover.

You also want to know how they are managing your portfolio. This should not require you to have a degree in finance to understand the answer, it needs to be in terms you can understand. Basically, you want to know if, when and how they would make changes. Paying for someone to put together a portfolio and then never do anything else or paying someone to make changes when they do not take market trends into account and can adjust their plan accordingly means you are not really receiving value for your fee. Would you pay a football coach that never changed personal or adjusted his gameplan for each opponent? Would he ever win if he didn’t do those things? It wouldn’t matter what he did in the past if we weren’t doing anything going forward.

If you’re not getting an honest answer or one an answer that you understand, that should be a red flag. If you can’t get a clear answer on how much a fee is and what all that fee is covering along with how your portfolio is being managed,  do you really feel like you’re getting the valuable service for that?