3 mistakes most investors make

Gather, don’t scatter.

Over the years, investors have come to believe that proper investment meant taking their money and spreading it out among various investment professionals. Over time, many investors accumulate, on average, four advisers and multiple accounts. From their 401 (k), Roth IRA, traditional IRA, brokerage and mutual fund accounts, to their 401 (k), traditional IRA, trust, and savings accounts, a family can accumulate multiple accounts with various financial institutions.

This dispersion of assets leads to a false sense of “diversification” by “not putting all your eggs in one basket”. The problem is that this strategy really hurts most investors.

Many investors have unknowingly dispersed their assets, resulting in no one person fully managing or understanding their entire situation, goals, or dreams. Without comprehensive planning, there is really no plan.

1. Inadequate asset allocation

Most investors have their assets spread out with various advisers and various financial firms. Neither advisor knows what the other is doing, resulting in an uncoordinated portfolio. An advisor from Company A could be selling the same asset that an advisor from Company B buys. Unless there is a coach going through the entire portfolio, their money is not coordinated.

Your asset allocation should always reflect your current position in life, your current goals, the future, feelings, and family characteristics. When your hard-earned money is distributed among other advisers and institutions, you are the only one who must properly manage your portfolio. Many people are not trained to monitor this correctly and consistently. Unfortunately, the overall plan suffers.

2. Incorrect correlation between investments, managers and funds

Without saying it, each investment must be excellent on its own. The investment, manager, or mutual fund should have a strong track record (I like a ten-year track record). You may be able to select quality investments. That’s not the problem. Where the collapse occurs is in knowing how these investments are interrelated. This is nearly impossible to track when one advisor is doing one thing and a different advisor is doing the opposite.

Let’s think about the analogy of a recipe. You may have the best ingredients to make your favorite dish. You can even have quality chefs at your beck and call ready to prepare this dish for you. If you put all these chefs in the same kitchen, but don’t let them know what the other one is doing, a culinary disaster awaits you. You can see that the probability that your dish will turn out correctly is very low, no matter how good the ingredients are. The same goes for your investment portfolio.

3. Lack of monitoring of the consolidated portfolio

You know that life is not static. Life is constantly changing. Whether it’s your job, your kids, the economy, world events, new laws, unplanned spending (and the list goes on and on), your world is constantly on the move. Your entire portfolio should also be dynamic. When market forces move, the properly managed portfolio must move with it. I am not talking about day trading, but about rebalancing when and where appropriate. In addition, your goals, future, feelings, and family characteristics are also changing. Each day is one day closer to your goals or not.

Having your assets dispersed makes it almost impossible to properly monitor your portfolio based on your changing life. With the technology and tools available, along with the new “open architecture” available at full-service financial institutions, you’d better hire an advisor to help you monitor your portfolio. This trusted advisor will coordinate all of your “eggs” and will not put them in the same “basket”. He / she can manage your diversified portfolio to meet your goals, future, feelings and family characteristics and ensure that your entire portfolio works in unison to make your dreams come true.

In conclusion, years ago, many companies limited themselves to the solutions that they could provide individually to the customer. Many had their own funds or investments, which may or may not have been in your best interest. Today’s full service companies have an “open architecture” and can go to market and offer you whatever solution is right for you. For your highest consideration, just hire an advisor who can go anywhere in the market with no limitations!