Annual Portfolio Check Up

I spent yesterday – Memorial Day – getting ready for an upcoming meeting with our Financial Advisor. We’re sitting down Friday for the first time in more than a year. We usually meet and do a ‘check up’ one time a year, but last year we skipped it due to the CV19 pandemic.

Before our annual meeting, I give him a summary document of all of our current assets and investments. He needs to know how much $ there is and how it is invested – down to the specific funds it is in. It takes about 90 minutes for me to pull together.

From that, he assesses everything based on what is and what might be. His firm has a proprietary Monte Carlo model that includes their research on where the markets are heading (not just historical information) and offers specific recommendations on how to best invest going forward.

I try to provide a few questions for him to be prepared to answer in advance, but this year’s are pretty straightforward …

⁃ What much might we spend annually going forward?

⁃ How much cash cushion should we be maintaining?

⁃ How does your firm feel the markets are valued today?

⁃ How might we rebalance our overall portfolio?

⁃ Opportunity for 0% capital gains in low-income 2021?

We’ve been spending roughly equal to our original FIRE budget over the last 5 years, but our investments have been performing well. I’m guessing we could increase our spending about 20-30% while maintaining a 90% confidence interval in the Monte Carlo analysis, which would be nice to know. Since we’ve been talking about a Florida place, we need to know how far ahead we are.

We try to maintain a 2-3 year spending cash cushion, but stretched it out in 2020 before the election. I’m concerned about the stock market’s valuation, so we’re sitting on more cash than usual right now. I’d like to hear how his firm’s expert economists feel how the market is right now with all of their sophisticated thinking.

I’m not sure I could easily tell you how much $ we have in stocks, bonds, and fixed notes right now or if it’s appropriate for our age and risk tolerance. The stock market has been red hot and I’m guessing we might be a bit more tipped to risk than we should be. Our mix of stocks & bonds also needs to be assessed against the potential for greater inflation. I tend to guy broad index funds, but maybe we should seek more exposure to sectors that might weather inflation better?

Lastly, we are between very high income years of working / selling stock options and future years of pensions, social security, and taxable investment sales. While our income is low, our accountant has pointed out a big opportunity to realize some capital gains, when we can pay just 0% or 10%, rather than higher rates in the future. I want to get our Financial Advisor’s take on that plan before we get much further into 2021.

Overall, I’m looking forward to the meeting. Our portfolio did especially well last year with our St. Patrick’s Day ‘Lucky Inflection Point’ and I think we can enhance our FIRE lifestyle with a Florida place and some other niceties. It’s nice to have an objective party assessing our investment and spending goals to make sure we aren’t getting ahead of ourselves.

Do you utilize a financial advisor and how often do you have them conduct a full assessment?

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5 thoughts on “Annual Portfolio Check Up

  1. I’ve seen all the articles on the pro/con debate of having a financial advisor. However, I do think having someone else look over your shoulder to offer ideas is useful.

    So I’m curious, how do you pay for your advisor — is it an hourly rate, or an assets under management agreement?

    Liked by 1 person

  2. I think a periodic outside assessment could be useful, but with that said, I haven’t utilized a professional in nearly thirty years. I do utilize a property management team for my real estate, and the management company owner provides occasional advice on our REI’s. But I entirely self-manage my stock/bond portfolio. I’m mainly a low cost index investor, so I’ve had little need for professionals to date. I’ve met with several advisors over the early part of my investing career and learned (quickly) they knew less than me, and yet still wanted to charge me for the lessons I provided to them. 😜 (Lol! Needless to say, those relationships didn’t last long!) Not that I’m a stock picking genius, I’m definitely not. But I feel very comfortable managing my own index fund investments. I dynamically adjust for P/E shifts (+/- 10% accordingly) and have well prepared for sequence of return risks. I essentially manage a smile-glide path for our investments. And I’ve become pretty tax savvy from an overall tax optimization standpoint since I deal with both RE and investment portfolio income. I could probably utilize a good fee-paid legacy professional, for a discussion or two, to ensure I’m optimizing properly for our future inheritance and legacy giving needs. That’s an area that I’m spending more time reading up on these days.

    Liked by 1 person

    1. Agree – while we do use a Financial Planner, I always tell people that THEY still need to be their primary planner themselves. If we severed our relationship tomorrow, I’m sure we would be fine – especially given where we are and all of the tools on the internet. Still, I do get value ($) that has made the counsel worthwhile for me.


  3. I do not use a financial advisor, but I do think a “fee based” full assessment is something worthwhile if you can find a good one.


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