Top Questions You Should Be Asking Your Adviser

In this week’s blog, we will examine some of the most pointed questions we’ve been asked by clients. If any of these questions or their answers strike a chord, call us. We can schedule a meeting to alleviate your concerns and probably uncover additional questions you didn’t know you had.

  1. How long do I need to work for my money to last?
  2. What is a realistic withdrawal percentage from my portfolio in retirement?
  3. When should I claim Social Security, and which option should I choose?
  4. What can I do to plan for an extended care situation in retirement?
  5. Now that I am retired, should my investment strategy change?
  6. What will Medicare and Medicaid actually cover for me?
  7. What is the most efficient way for me to leave something for my family?
  8. How can I plan for my tax-deferred accounts and how will it affect my taxes?
  9. When I retire, what is the best way for me to use my portfolio as disposable income?
  10. Do I own too much of my company stock?
  11. Should I take a cash balance or turn my funds into an annuity from my workplace retirement plan?
  12. Will my plan still work if we have another recession?
  13. How can I use my business as an asset for my retirement?

As you read through these questions, a few of them may elicit an emotional response, others may get you thinking about a similar concern you have with your plan. These are the questions we like to hear about as advisers. It is important that your adviser takes you beyond simply chasing returns, and works to structure your plan so that it accomplishes the future goals that are most important to you. Whether you hold the 5th or 6th ranked international bond fund is far less important that whether or not an international bond is the best way to accomplish the particular goal you have for that investment.

This New Investment Philosophy is Here to Stay

A major part of life in 2017 is the increased emphasis on social and environmental responsibility. What a lot of people don’t know is that there has been tremendous growth in investing according to these goals in recent years as well. Impact and Sustainable Investing have burst onto the scene and preliminary research tells us they have potential to be much more than just a passing fad.

Are You Investing With Your Heart Or Your Head?

While the two can overlap, it is important to mind the differences between impact investing and sustainable investing. The key distinction is not in the investments themselves but rather, why you are investing in them. If you want your investments to support social, environmental, or morally sound companies you are an impact investor. Impact investors know there are likely better statistical outcomes to be had but they are more interested in supporting causes and they believe in a “what goes around comes around” philosophy in business.

On the more strategic side of this field is the sustainable investor. While a sustainable investor may be happy that their investments are supporting good, responsible companies, they are more interested in the outcomes that can be achieved for their portfolio by investing this way. If you think about the impact a sustainable and reliable inventory source can have on a company, it is not difficult to imagine the creative strategic advantages of investing in such companies.

What’s In It For Me?

If you are more intrigued with the sustainable investing model there are a few key strategies to keep in mind. The first is the potential for growth, particularly in the energy field. As the technology around sustainable energy improves, the possibilities are endless. For the time being, these companies also can provide a hedge against other investments. Just as your mutual fund portfolio benefits from diversity, investing in sustainable investments can shelter a portion of your risk against some of you more traditional investments in ways that were not available before. For example, if you are invested in things like coal, natural gas, or oil, investments in sustainable funds or companies could react inversely to those energy sources.

What’s the Catch?

As with many new investment trends the challenges that face impact and sustainable investments is the lack of historical data. This is noteworthy from a performance standpoint, as well as an evaluation and identification focus. When attempting to grade risk and performance, it is vital to look back at past trends. Predicting investment performance with strong accuracy is impossible, but looking at how it has reacted to various market trends in the past is essential when determining viability. Because they are so new, many of the funds and companies that make up the impact and sustainable investment strategies simply do not have a strong sample size of past data to evaluate. This carries with it a certain amount of unpredictability risk.

The second pitfall with the youth of impact and sustainable investing has more to do with how we measure and evaluate the investments that are put in this category. Simply put, what makes an investment socially or environmentally responsible, and what is the quantifiable correlation between this responsibility and our financial success as the investor? We continue to draw closer to these key answers, but until we are there we have to stomach some degree of uncertainty when investing in this way.