7 questions to ask your advisor this year, and every year.

To say these times are volatile is an understatement. We recently saw another month of solid job growth and high employment. Interest rates are rising. The effects of the pandemic and Ukraine continue to abound. Inflation and whispers of a bear market are sparking fear.

But now is not the time to change course. It’s the time to make sure your money is being managed for long-term opportunity.

Here are seven questions you should know the answers to.

1. What is your investment manager’s strategy?

Is it based on long-term value or short-term gain? Think twice if you’re seeing significant turnover in your portfolio. That could mean it’s being managed for what might happen tomorrow or three months from now, as opposed to three years from now. If your money manager doesn’t have a proven strategy, it might not be up to the rigors of a volatile market. Our clients understand the Two Point Capital investment strategy is not a reactive one. It’s a proactive one, built to anticipate and leverage volatility and uncertainty in the markets.

2. How is your portfolio built?

If your portfolio is built for the mass market, as in mutual funds (passive), you could be over diversified and over exposed to market valuation compression. Also, while it may seem counterintuitive, there is increased risk in fixed income as interest rates rise from the near 0% levels of recent years. A traditional 60/40 mix has long been sold to clients as the best way to invest. In the current and evolving environment, you may have a portfolio asset allocation which will yield unexpected and unpleasant results. So, think about these issues and see if it’s time to move toward an actively managed approach.

3. What are your annual and long-term results and how do they stand up against industry standards?

Your financial advisor should be willing to proactively demonstrate their success not only for their firm but how they performed compared to the market and other firms. We benchmark against both the Russell 3000 and the S&P 500 to get the most accurate view of market activity, and we’ve out performed both over the past 22 years.

4. Do you understand your risk level and are you comfortable with it?

Have you done a risk assessment this year? A higher level of risk should get a higher rate of return, but that’s not always the case. Now is the time to have a frank discussion with your advisor about how much fluctuation you can take and still be engaged in pursuit of your long-term goals. In fact, we recommend reassessing your risk each year.

5. What are the current earnings valuation ratios of the companies you own?

Where have they been in the past, and what can you expect in the future? Once a stock has been added to one of our client’s portfolios, we continuously evaluate its value/quality relationship for the long term.

6. How much are you paying in management fees?

Many firms charge incremental, non-disclosed fees beyond their base fees. Do you know the total fees being paid on your account, who is charging them, and at what point in the process? Our management fees are straightforward and simple: 1% of your first million under-investment, and less than that for additional funds.

7. What resources does your firm use to evaluate stock prices and value?

There are standard tools and technologies for evaluating stock prices and value. But it takes additional analysis to identify stocks that are under or overvalued. And it takes forethought and discipline to get ahead of market shifts. We provide value-adding insight to outperform the markets over the long-run and ensure you’re well-positioned for whatever lies ahead.

If your advisor can’t answer these questions, talk to us. We’re long-term investors using a proprietary discipline of Value + Quality™, focused on doing what’s right. Our clients benefit from the Two Point Capital risk management approach that comes from personalizing each portfolio to their financial goals, their time horizon, and their risk profile.

It’s how we turn capital into confidence, and short-term volatility into long term opportunity.

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