Making Your Own Investment Decisions

Are you leaving the fate of your retirement nest egg to chance? Unfortunately, it can sometimes be difficult for some investors to know when it is too risky to make their own investment decisions. When the money at stake represents a lifetime of savings or a lump-sum pension payment, there is no room for error. This money is crucial for retirement and it cannot be recaptured.

The reality of successful money management is that it is a complicated and time-consuming process. There is always some element of uncertainty in investing. At our firm, we have a six-step investment process for helping our clients build a successful investment strategy. By working with a team of the industry’s most talented professionals, we have direct access to a level of capability rarely available to most investors.

Investing is serious business. Many of the people who can benefit the most from expert advice are those who are retired or near retirement. They need help making critical decisions about their retirement plans and IRAs. To help you understand how to achieve true long-term investment success, here are a few tips you can use to keep from being misled into investing in a product that is unsuitable for your needs.

1) Before you meet with a Certified Financial Planner practitioner or other financial professional, write down your investment goals. He or she will need to understand your current financial position. If you are ready to start taking distributions from your retirement plan, do you know how much you will need to maintain your standard of living? How much income will you need to meet your fixed living expenses? Through consultations with a financial professional, you will determine where you are in terms of risk and return. Using what is learned during this initial consultation about your goals, values, interests, relationships and assets, your investment advisor should be willing to craft a customized investment plan designed to accomplish everything that’s important to you. This plan serves as a detailed roadmap demonstrating exactly how you will move you’re your current situation to achieve all of your goals over time.

2) Going to the experts in certain instances will help you decide how to invest your savings, but you should first understand whom you are dealing with. There are a confusing number of different professionals who provide investment advice. For example, there are financial advisors, brokers, investment consultants, financial consultants and financial planners. Any firm or individual who receives compensation for providing advice about securities (“investment advice”) is required to register with the SEC (or at the state level) and is regulated under the Investment Advisers Act of 1940.

3) You should understand that a broker who calls himself or herself a “financial planner” does not necessarily have any extra training or expertise other than that of selling stocks and bonds. An Investment Advisor is a professional who makes decisions about asset allocation, developing the investment strategy, implementing the strategy with appropriate Investment Managers and monitoring the strategy on an ongoing basis. He or she should provide comprehensive and continuous investment advice and recommend the best investment for you. His or her compensation should not be dependent upon which products or assets you end up investing in. Sound investing requires careful consideration between those who are product driven, with more of an interest in selling you financial products, and an Investment Advisor who will take the time to help you explore your options if you receive a lump sum pension payment or an early retirement payout. A CFP practitioner and Investment Advisor will provide reliable recommendations regarding which Portfolio Strategists and Investment Managers will work best for you. If you choose to work with a CFP practitioner and Investment Advisor, make sure you are offered both parts of their Form ADV. They are required to give you Part II or a similar document setting forth their methods of compensation, education, areas of expertise, investment strategies and more.

4) Don't feel pressured to invest a lump sum pension payment or an early retirement payout too quickly. Avoid high-pressure sales tactics and invest only when you feel ready to do so.

5) Make sure you understand how your money will be invested. More than timing or the specific securities that you invest in, the way in which your assets are allocated (or diversified) and how they are rebalanced ultimately drives your returns. The way in which your assets are allocated in varying proportions is one of the most important factors that determines both the risk and return of your portfolio.

Are you are unsure if your current investments are both fully-diversified and well protected against volatility-or if they fit together in a well-defined portfolio?

Investing is serious business –after all, it is your future. You could opt to go it alone and make your own investment decisions. Or, you could choose to manage your investments by working with experts who are backed by a disciplined decision making process.