Does a Financial Advisor Need to Look at My Entire Portfolio?


Ask an Advisor: Does a Financial Advisor Need to Look at My Entire Portfolio?

Ask an Advisor: Does a Financial Advisor Need to Look at My Entire Portfolio?

Is it possible to have someone advise me on only part of my portfolio and does that make sense?

-Marda

It really depends on both what you’re trying to achieve and what your financial advisor is willing to accommodate. In most situations, it will probably be in your best interest to have your financial advisor provide advice on your entire portfolio. Although, there are some specific circumstances where that may not apply. (If you need help managing your portfolio or creating a financial plan, this tool can help match you with potential advisors.)

Why You Want Your Financial Advisor to Advise on Your Entire Portfolio

Ask an Advisor: Does a Financial Advisor Need to Look at My Entire Portfolio?

Ask an Advisor: Does a Financial Advisor Need to Look at My Entire Portfolio?

Your investment portfolio is likely the most powerful tool you have for reaching your biggest long-term financial goals, and it’s important to ensure that it is all working together to keep you on the right track.

Your 401(k), IRA and brokerage may technically be separate accounts, but they’re all pieces of one big puzzle.

For example, let’s say that your IRA is invested in a way that perfectly aligns with your goals but your 401(k) is a jumbled mess. That’s a big missed opportunity that can hurt your ability to get where you want to go.

There are also certain strategies, such as asset location, that can boost your returns and can only be implemented with a full view of your entire portfolio.

Now, that doesn’t mean that your financial advisor has to actually manage all of your money. There are pros and cons to that as well, and you may have good reasons for wanting or not wanting that. There are even some accounts, such as employer-sponsored retirement plans, that your financial advisor likely can’t manage.

But at the very least, giving your financial advisor a full view of all of your investments so that they can make recommendations on all of them is usually the best way to ensure that you’re on the right track. (A financial advisor can provide advice on a range of topics, including investments, retirement and tax planning.)

Why You Might Keep Some of Your Portfolio Separate

With all of that said, I’ve had situations in which clients kept certain parts of their portfolio separate from the rest of our work together.

Some of my clients have cryptocurrency assets, which is not something that I advise on. Some of my clients have decided to keep concentrated positions in certain individual stocks. In some cases, this is company stock they have received from their employer, and in other cases, it’s stock holdings they’ve had for years and don’t want to sell.

I even worked with a couple who had some small IRAs managed by another financial advisor who was a family friend of theirs. They didn’t want to damage that relationship and I certainly wasn’t going to force them to.

In each of these cases, I talked to my clients about the pros and cons of these choices and they made the decision that they felt was best for them. From there, I made recommendations on the rest of their portfolios as best I could. (And if you need help finding a financial professional, this tool can help you match with potential advisors.)

It May Depend on the Financial Advisor

Ask an Advisor: Does a Financial Advisor Need to Look at My Entire Portfolio?

Ask an Advisor: Does a Financial Advisor Need to Look at My Entire Portfolio?

Of course, what you want is only part of the equation. How your financial advisor works and what they’re willing to accommodate matters too.

Some financial advisors will be happy to focus only on a specific part of your investment portfolio. The good ones will clearly communicate the limitations of such an approach and clearly define the scope of your work together. They will then give you the best guidance they can within those boundaries.

Other financial advisors may tell you that it’s all or nothing. They will only work with you if they are advising you on your entire portfolio.

Both types of advisors are absolutely out there, so it’s just a matter of finding the right professional for what you’re looking for. (And if you need help finding a financial advisor, this tool can help you find potential matches.)

Bottom Line

In most cases, I believe it’s in your best interest to have your financial advisor at least make recommendations on your entire portfolio. That way you can be confident that the advice is based on the full scope of your financial situation and goals.

But at the end of the day, this is about you and your personal goals. If you feel like you need a different arrangement to help you get there, you can likely find a financial advisor willing to help.

Tips for Finding a Financial Advisor

  • Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

  • Consider a few advisors before settling on one. It’s important to make sure you find someone you trust to manage your money. As you consider your options, these are the questions you should ask an advisor to ensure you make the right choice.

Matt Becker, CFP®, is a SmartAsset financial planning columnist and answers reader questions on personal finance and tax topics. Got a question you’d like answered? Email AskAnAdvisor@smartasset.com and your question may be answered in a future column.

Please note that Matt is not a participant in the SmartAdvisor Match platform, and he has been compensated for this article.

Photo credit: ©Jen Barker Worley, ©iStockPhoto/andresr, ©iStockPhoto/mixetto

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