Wealth Management Boulder: How Can It Help Maximize Portfolio Returns?
Portfolio management can be nerve-wracking for even the most experienced investors. Depending on your investment strategy, a lot can go wrong to compromise the value of your portfolio and create long-lasting repercussions for you and your family. Hiring a financial advisor specializing in portfolio and wealth management, Boulder, can help you avoid this fate. If you are an ultra-high net worth investor with a net worth over $10 million, then we suggest you start by reading our exclusive guide on choosing the right financial advisor. This will help you understand the intricacies of wealth management and how it helpsmaximize portfolio returns.
STRATEGIES FOR FAMILIES WORTH $5 MILLION TO $500 MILLION
The insights you’ll discover from our published book will help you integrate a variety of wealth management tools with financial planning, providing guidance for your future security alongside complex financial strategies, so your human and financial capital will both flourish.
Clients frequently share with us how the knowledge gained from this book helped provide them tremendous clarity, shattering industry-pitched ideologies, while offering insight and direction in making such important financial decisions.
At Pillar Wealth Management, we believe that having a wealth manager on your team can go a long way in boosting your net worth. As a team of fiduciary advisors, we offer over 60 years of combined experience in variousaspects of wealth management. We can help you create a high-performing portfolio that reflects your financial goals. If you are interested in learning aboutour portfolio design services, click here to book a free consultation session with us.
In this blog, we’ll discuss some of the most common mistakes that high net worth investors make when it comes to portfolio management and how you can accelerate growth with wealth management,Boulder.
Common Biases and Mistakes to Avoid With Portfolio Management
As mentioned at the onset, portfolio management can be highly stressful. It’s even more difficult if you are trying to manage things on your own. Investors tend to get trapped by behavioral biases that influence their investment decisions and can have an adverse impact on their portfolio.
Let us look at some of the behavioral biases that you want to avoid if you are trying to manage your investment portfolio on your own. You can also review the techniques utilized by your current portfolio manager or financial advisor. If you feel they may be going down a similar route, then it may be time to make a change.
Aversion to Losses
Being scared of losses is natural. However, being completely averse to losses is a type of behavioral bias where the negative sentiments associated with a loss are much more intense than the happiness you feel when you earn a gain on your investment. This can lead to poor investment decisions, such as limiting your portfolio to low-risk and low-return investments. You may also end up holding onto losing positions for too long.
Working with a qualified financial advisor can help you be more objective about gains and losses. While they will help you minimize any losses as much as possible, a financial advisor with experience in wealth management, Boulder, can also help you create a strategic investment portfolio that balances your risk and return in a better way.
For instance, the team at Pillar Wealth Management creates an Efficient Frontier for a client’s investments. This helps you generate an optimal amount of returns without exposing you to too much risk. In simple words, you get to enjoy the best of both worlds. If we notice your Efficient Frontier changing so that your risk increases, we can balance it again and ensure your financial security.
To learn more about the other wealth management techniques that help maximize portfolio returns, we suggest your order a free hardcover copy of our book, The Art of Protecting Ultra-High Net Worth Portfolios and Estates – Strategies For Families Worth $25 Million To $500 Million.
Humans thrive on social interaction. We feel a lot more comfortable moving with the crowd than against it. That’s precisely what the herding bias entails. Investors tend to feel more secure when they follow suit with others and invest in the same type of assets. There’s comfort in knowing that whether you win or lose, you will do it together.
This psychological condition can create significant problems. For instance, this type of behavioral bias can also lead to events such as a stock market bubble and cause the market to crash. Think about it. If a large proportion of people are making the wrong decisions, the effect will be equally catastrophic.
Having a qualified wealth manager on your side can prevent this from happening. Instead of encouraging you to follow a current investment trend, your wealth manager will conduct an independent analysis that is free of sentiment and help you make a more objective decision. This can offer you more security in the long run. It can also help you capitalize on investment opportunities that no one else sees coming.
When it comes to investment management and wealth management, you should never rely on a single piece of information when making a financial decision. Unfortunately, investors that suffer from an anchoring bias tend to do exactly that. They place too much emphasis on one piece of information and use it to guide their investment decisions. Remember, financial markets such as the stock market and the forex market are constantly in flux. Things can change very rapidly, and assumptions that worked a while back can quickly become obsolete.
Having a wealth manager that can observe these changes in the market can help you modify and rebalance your investment portfolio when required. This can help you:
- Respond to market changes efficiently
- Reduce your risk
- Keep you on the right track for achieving your investment goals
At Pillar Wealth Management, we draw information from a variety of resources to help you create a responsive investment portfolio. For instance, we use data that goes as far back as 1925, when creating your investment portfolio. This can allow us to create a more resilient portfolio growth strategy capable of withstanding significant shifts in the market and protecting your wealth. By determining how your portfolio will react amid adverse market conditions, we can manage your risk in a better way.
If you want to learn about this technique, click here to arrange a free consultation with one of our wealth managers.
This is another common behavioral bias that plagues investors. The confirmation bias occurs when you reach a conclusion based on information and facts that support your preconceived notions. We all want to win. It’s natural. However, it is important that you take all the information into account before making a decision. When investors fall victim to the confirmation bias, they end up ignoring any information that does not align with their assumptions. This can backfire and lead to significant losses.
If you are looking to accelerate growth with wealth management, Boulder, you must avoid this sort of bias. As unpleasant as some facts may be, you must keep them in mind when making a financial decision. For instance, if your information suggests that the returns on a particular investment opportunity are dubious at best, it’s better to show restraint. In the long run, you may thank yourself for it.
This type of bias is likely to occur when your financial advisor emphasizes performance over other things. It’s easy to lose track of your initial goals when this happens. As long as their information suggests that a particular investment can deliver a high return, they may ignore any facts that indicate otherwise. At Pillar Wealth Management, we prioritize achieving financial serenity over performance. This type of shift can help you reset your priorities so that you no longer fall victim to overly risky investments. Instead, you keep your goals at the forefront and only take a specified amount of risk that lets you achieve high performance without compromising your net worth.
To learn more about which critical shifts can help high net worth investors accelerate growth with wealth management, Boulder, click here to read our exclusive guide.
Choosing Active Over Passive Management
Many high net worth investors end up working with financial advisors that convince them to pursue active over passive management. Active management involves trying to time the market to make the most of new investment opportunities and generate high returns. Active managers will essentially try and beat the market. Passive management, on the other hand, involves long-term investments that represent significantly lower risk. It lets you generate steady returns over a specific period of time.
Creating an investment portfolio that relies solely on active management can create problems for you. To begin with, it generates short-term capital gains that are taxed at a much higher rate. Secondly, active managers charge more for their services. Compared to passive management, there’s a lot more work involved in active management techniques, which reflects in the fee structure.
You should also know that despite the promises most active managers make, they usually fail to beat the market. As per SPIVA (Standard and Poor’s Active Vs. Passive Scorecard), approximately 88.97% of actively managed domestic funds underperformed in 2003-2018.
That said, active management does have its advantages. If you use it strategically and balance active and passive management techniques, you can keep earning high returns while also ensuring the stability of your portfolio. At Pillar Wealth Management, we combine active and passive management to offer a more comprehensive solution that draws on the benefits offered by these investment techniques while controlling the risks.
To learn more about our approach to wealth management, Boulder, click here to book a free session with our wealth advisors today!
What Else Can You Do Maximize Portfolio Returns With Wealth Management Boulder?
Besides avoiding the biases listed above, you can also use other techniques to maximize portfolio returns and ensure holistic wealth management, Boulder. If you work with Pillar Wealth Management, you can expect the following to contribute to your overall portfolio performance:
Keeping an Eye on the Costs
Earning high returns is great, but if your expenses are too high, this can quickly bring you back to square one. To avoid this, you need to hire a wealth manager who:
- Vigorously pursues tax minimization
- Combines active with passive management
- Has a transparent fee structure
Knowing about your costs will help you predict your overall profits more easily and maintain a healthy income to boost your net worth. It also contributes to retirement planning.
Ensuring Diversification and Proper Asset Allocation
Diversification and asset allocation are vital toolsthat let you accelerate growth with wealth management, Boulder.A diversified investment portfolio is better protected against any drastic shifts in the market while still generating consistent returns. If your current investment portfolio relies too heavily on equity investments, you need to make some changes.
Most importantly, your portfolio must include other assets, such as cash and bonds. These assets are a lot less volatile than equities. They also move in different directions compared to the equity market, so if a particular event affects the value of your shares, you can be assured that it won’t have the same kind of impact on your bonds and cash-based assets.
If your current wealth manager is not ensuring appropriate diversification through asset allocation, we strongly recommend you switch to someone else. If you need help finding a suitable wealth manager for high net worth investors, click here to read our short guide.
Create a Stronger Investment Portfolio With Pillar Wealth Management
Portfolio management can be a complex and time-consuming process. However, with the right investment techniques and market data, you can construct a robust investment portfolio that aligns with your financial goals and helps you navigate investment risks more easily. Portfolio management is also critical for improved wealth management, Boulder.
If you need assistance with portfolio and wealth management, we can help you out. Pillar Wealth Management prides itself on offering fiduciary advisory services that can help you maximize portfolio returns. We specialize in portfolio planning that helps accelerate your growth and can help you avoid the pitfalls of investing to secure your financial future. Click here to talk to one of our wealth management experts in a free consultation session!
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