A retired woman recently sat with me for over an hour and she started describing the various accounts that she had in the United States, Europe, and Israel. When I asked her to describe her overall strategy for her total family portfolio, she was stumped.
If you don’t know where you’re going, any road will get you there
I explained to her that in order to make reasonable investment decisions, she needs to have a unified plan. She replied, “I don’t want to put all of my eggs in one basket, which is why I want to have lots of different advisors.” I explained to her that every team needs a quarterback, and either she can be her own quarterback or else she has to choose one advisor to be the central player who helps her with the whole game. That does not mean that she cannot diversify with different financial products, exchange traded funds, and money managers. However, if she doesn’t have one central plan, she could end up investing in a rather haphazard manner.
The bicycle wheel approach
In the end, she imagined her portfolio as a bicycle wheel. She and I stood in the middle as the “hub.” We selected various institutional money managers to handle the day-to-day operations of different parts of her portfolio. Together, we would oversee those managers, discuss the way that they worked with each other, and make sure that there wasn’t a lot of overlap in what they were doing.
In order to properly measure the value that each manager was bringing to the table, we opened up separate accounts for each one. In fact, this strategy is known as “separately managed accounts.” To learn more about how SMAs can work for you, check out this 12 minute video: Profile-Financial.com/sma
Douglas Goldstein, CFP®, GFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation on how to set up your American assets to meet your financial goals. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.
Published January 4, 2016. Updated March 2022