Managing Assets in a Changing World: How to Give Your Portfolio the Attention It Needs

Managing Assets in a Changing World: How to Give Your Portfolio the Attention It Needs

Savvy people know that doing the same thing over and over can get you the same result. These days it may not be the result one desires. Our ever-changing global economy requires a more proactive approach than ever before. As soon as affairs are left to chance for a few months or a few quarters, it’s as if you’ve stopped while the world kept moving. It’s far too easy to miss a chance or a challenge in time to right the course.

Here are some key factors to discuss with your advisors:

  • Evaluate the underlying costs in your portfolio relative to your returns. In addition to the disclosed fee your advisor charges, there are often unseen costs for specific transactions as well as management fees assessed at the institutional level. These unseen fees can noticeably erode returns. Ask your advisor to share the total internal costs of your portfolio.
  • Consider the impact of taxes as they apply to dividends and capital gains. Discuss effective tax harvesting with your advisor. Pay careful attention to tax triggers that may result from recommended transactions. A buy/sell opportunity may appear attractive yet a resulting tax event can erode the upside.
  • We are now experiencing rising interest rates. Since 1980, we’ve had a bull market in bonds. It’s important to evaluate your bond portfolio in light of a potential bear market. Review the quality, location, call provisions and duration embedded in your current portfolio or future choices.
  • Broaden your perspective on diversification. In the past, owning several hundred equities may have been sufficient. Today it may be prudent to own several thousand in order to reduce risk.
  • We haven’t experienced significant inflation since the 1970s. Talk to your advisor about the potential impact of inflation on your portfolio and any hedge you may need to put in place.
  • Consider what may happen if the dollar erodes in value. If you do not already own international currencies or stocks of companies based outside of the United States, discuss the potential applicability with your advisor.
  • Estate Tax laws are changing at the federal level. Meet with your financial and legal advisors now to prepare in advance.

Remember in today’s environment a buy and hold strategy may or may not be as conservative or prudent as in previous times. Every portfolio needs regular proactive attention. After reviewing your portfolio, your advisor may feel no changes are necessary. It’s the review itself that can’t be overlooked.

As always, please feel free to call regarding this or any planning related questions.


The views expressed herein are those of the author and do not necessarily reflect the views of Morgan Stanley Smith Barney or its affiliates. All opinions are subject to change without notice. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results. Tax laws are complex and subject to change. Morgan Stanley Smith Barney LLC, its affiliates and Morgan Stanley Smith Barney Financial Advisors do not provide tax or legal advice. This material was not intended or written to be used for the purpose of avoiding tax penalties that may be imposed on the taxpayer. Individuals are urged to consult their personal tax or legal advisors to understand the tax and related consequences of any actions or investments described herein. International Investing may not be suitable for every investor and is subject to additional risks, including currency fluctuations, political factors, withholding, lack of liquidity, the absence of adequate financial information, and exchange control restrictions impacting foreign issuers. These risks may be magnified in emerging markets. Asset Allocation and diversification does not assure a profit or protect against loss.

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