3 Major Questions To Ask Your Financial Advisor About Your Investment Portfolio

To make sure you and your investor are on the same course, here are three key questions to ask your advisor about the state of your portfolio.

Investing is one thing that cannot exist in a bubble. An investor cannot function by his or herself without the availability of core market information and a level of analysis.

While some people can have the presence of mind and technical expertise to invest and carry out all the necessary research by themselves, some others get stuck when they try to get more clarity into the sometimes confusing financial lingo.

It might not even be to start the process; an investor might have done a great job up until a point when he or she starts doubting his or her strategies and processes. This is where an expert comes in and this expert is known as the financial advisor.

The financial advisor is the individual who offers professional guidance and renders financial services to his or her clients based on their financial situation and their financial objective.

The problem comes when an investor who has not been part of your proceedings so far, has to come and understand fully what you are trying to achieve. To make sure you and your investor are on the same course, here are three key questions to ask your advisor about the state of your portfolio.

What do you think about my investment strategy?

Our investment strategies are born out of our investment objectives. Having created our financial plan and boldly defined our given objectives, our time horizon, and risk level, we created and implemented certain investment strategies as the vehicles to take us there.

A very profound question to ask your financial advisor is if those strategies you have employed are capable of taking you there. If your goal is to earn dividends for example and you have been investing in low-yield dividend stocks unknowingly, he or she will help you spot it out.

On the basis of this, he or she can now recommend whether you should tweak your strategies or not.

How Is My Portfolio Performing?

Believe it or not, you can lose track of how your portfolio is truly performing. Some stocks will outperform themselves while others will underperform, and because of how some have outperformed, you just might think everything is going on fine.

Rather than looking at individual stocks, which many people erroneously do, your advisor should be asked to look at your investments grouped together. How are they performing as a whole?

Are you making profits or experiencing growth? Are higher than normal losses being incurred? Where you have made wrong assessments, he or she will be able to guide you.

Is My Portfolio Balanced?

Objectively, it might also be hard to see if you are overweight in a certain type of stock. This is especially true where you have invested one stock at a time over a period of years.

To you, there might be a good representation of all your stocks. This is why you need to ask your advisor how your portfolio is doing in terms of being overweight or underweight in certain regards. What needs to be removed? What is missing from the portfolio?

These questions will serve as the mirror by which you will then adjust your investment plan or portfolio to suit your true desires.

Written by Lawretta Egba.