What should your financial advisor be doing for you?

Updated: Jun 10

We all have different experiences when it comes to investing, but one thing is the same for everyone: we all want a well-diversified portfolio.

The answer to this for many in the advisory role just means stock diversification, mutual funds, bonds, and annuities. The problem with that is you aren’t totally diversified. Each of those is all part of the broader financial market and in some way connect.

So then, what should your advisor be adding to your portfolio?

The answer is alternatives and real estate. Your advisory team should be showing you how your investments are performing relative to other asset classes and other investment opportunities such as passive real estate or alternative options.

The public often assumes they are diversified because of investments in different sectors of the market such as, technology companies, airlines, pharmaceuticals, and perhaps some exposure to foreign markets. Additionally, they have exposure to the debt market through bonds and some other funds such as annuities. However, as we mentioned, each of these is linked to the overall financial markets and does not provide a diverse income stream for wealth accumulation.

True diversification is getting into other asset classes and other investment classes. These are used to mitigate the risk of your portfolio in the financial markets, create investment income, decrease taxation, and help you achieve your wealth goals.

You should be looking for an advisor you can partner with and who aims to provide you with a completely diversified portfolio that achieves your income and wealth goals.

So what are these other opportunities?

One example is passive investment real estate, where you get consistent cash flow and double-digit returns. This investment also gives you tax advantages through the depreciation pass-through. The same is true with alternative investments. Alternative investments are a very broad range of investments, but essentially mean anything that does not fall into one of the conventional equity/income/cash categories. Alternative investments include private equity, venture capital, hedge funds, managed futures, art and antiques, commodities, and derivative contracts. These types of investments open the door to true diversification.

Your diversification should be built around the financial and tax strategies that are most beneficial for you. That means you should be in four different investment buckets. One of those investment buckets is savings. Do you have liquid capital set aside for a rainy day that has zero risk and low to moderate returns? The second is the financial market, where you should have a small portion of your wealth. The bulk of your investments should be in two other buckets -- passive investment real estate and alternative investments that generate a tax advantage for you, and that generate your cash flow while your investment grows.

The problem is that many financial advisors don’t discuss those two other buckets for a multitude of reasons, ranging from lack of availability at their brokerage house, not being able to charge fees, or simply a lack of understanding of them.

You should be looking for an advisor you can partner with and who aims to provide you with a completely diversified portfolio that achieves your income and wealth goals.

To find out how you can get true diversity with passive real estate and alternative investments, call 817.912.1569 to schedule an appointment with us or attend a local event and start building your own customized strategy. Use the link below to schedule an appointment today.

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