Advisors play a vital role in helping clients select and adjust investment positions to take advantage of positives, while also reducing the urge to buy or sell in response to short-term market ups and downs.
Determining personal financial goals is a lifelong and dynamic process, continuously adjusting as life objectives and circumstances change for clients on a case-by-case basis.
Establishing an effective and appropriate asset allocation to help clients meet their goals and investment needs can be a very complex but also extremely rewarding process to help them stay focused on those goals and achieve long-term financial security.
A well-maintained portfolio is vital to clients’ success. Asset allocation plays an essential role in determining a specific individual’s overall risk and return, becoming the glue that connects and aligns a client’s goals and strategies.
In addition, determining the appropriate asset allocation is one of the most important tasks to complete when beginning to construct a financial portfolio for clients.
There are many elements, both financial and non-financial, to consider when constructing a financial portfolio. Influential attributes such as age, personality, time horizon, current capital needs, and risk tolerance all help clarify a client’s current and future situation.
Ultimately, a well-allocated portfolio is an accurate reflection of a client’s personal qualities and financial preferences.
Portfolio diversification reduces volatility by spreading market risk across several asset classes.
A well-allocated portfolio can also improve clients’ opportunities to earn more consistent returns over time and allows them to adopt a valuable long-term mentality regarding their financial portfolios. This helps them stay in control of their financial plan, tailoring investments to fit their goals and tolerance for risk.
Market volatility is unpredictable. Stock prices may fluctuate due to individual companies, industries, sectors and overall general market conditions.
Geopolitical events have also been an extremely influential factor in determining market trends and themes.
The ability to have autonomy over investment decisions, with help from experienced advisors, provides clients with the proper guidance, support and confidence that they need to accomplish their financial goals and objectives. It is important for advisors to act as confidantes, creating meaningful relationships with clients to assist with decision-making processes to keep the financial plan on target once it is developed.
This story is part of a 30-30 series on building a better portfolio.