Is Your Advisor a Fiduciary?

A Fiduciary has a legal responsibility to put his client’s best interests ahead of his own. Your advisor may not be acting as a Fiduciary if he/she works for your major bank or well-known brokerage firm and is “managing” your portfolio. Surprised? Portfolio Wisdom, an Investment Advisor, Registered in Tennessee since 2009, is a Fiduciary.

Questions you might want to ask existing or prospective “advisors” include:

  1. How are you paid? Commissions, fees, or performance-based incentives? Do you receive “soft dollars” or other hidden compensation that might influence the products you recommend?
  2. When and how do you take action when market conditions change, as they did in February 2020 or in 2008? Do you do anything? Do you rebalance between third party money managers? Do you do anything besides periodically rebalance? Do you contact me? Must I contact you? Or, do you take immediate action in my portfolio based on your discretion as my fiduciary?
  3. Can you formally advise me on my 401k or other assets not held with your specific financial institution?

What Is Your Plan for the Next Bear Market in Stocks?

As long as there have been markets, there have been highs and lows in those markets. Since 1900, US stocks have had negative annual returns approximately 30% of the time. . . maybe a little more. So the question is when not if, we will see another bear market in US stocks and bonds. We saw a multi-year bear market in gold begin in late 2012, one in US real estate began in 2006, one in US stocks begin in late 2007 and early 2020, and we haven’t seen a real bear market in US Treasury bonds for quite a while. . . But it will happen.

So what’s your plan for the next bear market? Has your financial advisor discussed making any changes when the next downturn begins? Have you considered whether or not you are comfortable riding out the same type of portfolio losses you experienced in the last US equity bear market in early 2020?

At Portfolio Wisdom, not only do we have a plan, our more aggressive strategies are designed to actually make money during the next stock downturn. Furthermore, I have actually written computer code to model my strategies, allowing me (and you) to get a sense of how our approach might perform in certain kinds of market conditions.

Please contact me to learn how our methodology would allocate your portfolio during a bear market . . . or learn how you should allocate your portfolio right now.