Monitoring One’s Portfolio – a Key to Success

Clients generally and appropriately take time and great care when working with their advisor to select allocations to establish a portfolio. 

Unfortunately, some clients are then willing to adopt a “create it and forget it” mentality, failing to review the portfolio on a regular basis.  That is a highly risky practice, because change is inevitable.  Changes are bound to occur in one’s personal life, in the market climate, tax codes, business cycles, interest rates, and so forth.  Any or all of these factors could be reason to adjust one’s portfolio allocations.

Given that changes will occur, we recommend identifying some type of triggering event (such as a tax law change) that would cause us to review the portfolio, or perhaps setting a specific time frame, such as quarterly or every six months, for this monitoring.   These are macro reasons to review an entire portfolio.

But we also have micro reasons for monitoring individual holdings and individual accounts within the portfolio.   Some actually need to be monitored on a daily basis, others less frequently. 

For example, individual stocks owned in a portfolio might well be reviewed more frequently than stocks owned through a professionally managed mutual fund.  Too often, an individual stock may perform well immediately after purchase, leading the investor to become “too comfortable” with it instead of keeping a closer watch.  Wise investors realize that there is always a reason to buy – and a reason to sell.  Defining both of these before an investment is made will allow buy-sell decisions to to be made in a disciplined way, not on emotions.

It’s important for investors to know who is responsible for this monitoring – them or their financial advisors.  Also, will reviews with an advisor take place in person or by another means of communication?   At Thorley Wealth Management, we favor meeting with clients on a personal and scheduled basis, generally at least at every six months.  We believe monitoring to be extremely important, and best done proactively in a face-to-face meeting with our clients.