Broker Check

The Nice List

| December 10, 2019
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One of my favorite Holiday traditions is the presence of our Elf on the Shelf.  Last year, he arrived from the North Pole via parachute with tickets to the Polar Express.  What fun that was!  The elf didn’t really mind that it was in Cleveland on a Tuesday night and Dad would have to drive all the way home in the middle of a snow storm with everyone else snoozing away – but that’s what the holidays are all about!  Side note – if your elf game needs work, follow me on Twitter this season. 😊

Mr. Elf provides a much-needed boost to our parenting team during the holidays.  Our kids know that if they can get along with each other, help out around the house and make it another year without getting suspended from school, they will make Santa’s “nice” list.  Our older two boys are very much into compiling their Christmas lists.  It seems to double in length each year, though they are clear that Santa works on a best-efforts basis.

In the spirit of the holidays, I thought I would compile a list for investors who make the nice list.  If you have worked hard to accumulate your portfolio and you have serious goals in mind, you deserve to be on the nice list.  All portfolios should be considered based on the investor’s personal risk tolerance and circumstances of course, but here are five things just about all “nice list” investors should have:


  1. Risk Efficiency. Is your portfolio being well-compensated for the risks you are assuming?  I can’t tell you how many times new clients have conveyed that they are risk-averse, and then they show us their portfolio, which is riddled with risky positions like high yield bonds, individual stocks, or commodity positions.  We have been blessed the last ten plus years with this extended bull market.  Is your portfolio prepared for the next stage of the cycle?


  1. Cost Efficiency. Is your portfolio as efficient as it can be in terms of explicit and implicit costs?  There are lots of places to hide costs in a portfolio these days.  Are you paying an advisory fee, or commissions?  Is there a platform fee to the custodian?  Are there transaction fees?  What about IRA custody fees?  Annual financial planning fees?  Are the internal costs of the positions significant?  Those costs can eat away at your return over the years if they aren’t under control.


  1. Tax Efficiency. Is your portfolio being managed in a tax-efficient manner?  In particular, are you cognizant of any capital gains distributions that are hitting before year-end?  Are you holding taxable bonds or municipal bonds?  Are you considering ideas such as funding back-door Roth IRAs, using highly-appreciated securities for charitable gifting or maximizing contributions to tax-deductible accounts?  Many wealth managers do not hold themselves accountable to your 1099.  Your portfolio should align with your tax incentives.


  1. Execution. Is your portfolio being managed in a timely and efficient manner?  If you’re doing it yourself – does your time availability line up with the best time to be making moves?  If you are working with an advisor, is he/she making moves at the optimal time?  As this expansion has extended and recession signs start to pop up, is your portfolio being managed proactively?  Have you granted full or limited discretionary authority?


  1. Transparency.  Do you KNOW the answers to items 1-4?  Do you have an open and comfortable line of communication with your wealth manager?  Do you feel there is two-way clarity in the relationship?  The truth is, wealth managers are not mechanics, doctors or scientists.  The inner-workings of your portfolio can and should be communicated to you in a way in which you can understand.  If it is “complicated” to the point where you don’t understand, it probably isn’t a good fit.


Lincoln Financial Advisors does not provide legal or tax advice.  Adam Weingartner is a registered representative of Lincoln Financial Advisors. Securities and investment advisory services offered through Lincoln Financial Advisors Corp., a broker/dealer (Member SIPC) and registered investment advisor.  Insurance offered through Lincoln affiliates and other fine companies. Bluestone Wealth Partners is not an affiliate of Lincoln Financial Advisors.   CRN-2845088-112519

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