Looking for PMS when Investing

You have heard it said many time before, from many financial professionals, “Not all investments are the same.” This begs the questions, “What then should I be looking for when selecting my investments?” I encourage clients to look for three main things; Product, Management, and Structure or PMS. Only when all three elements work properly in unison does it make for a good investment.

Product: Bonds, stocks, and real estate property all represent investment products. Sadly this is often the only element that is evaluated by the investor. For example: I have heard clients say that they “would never invest in stocks because the stock market is risky”. After further discussion, I find that they are putting all stocks in the same “risky” category and fail to understand that not all stocks are created equally. This is true of all investments, make sure that your investment product has sound financials and makes since for your risk tolerance.

Management: American Funds, Franklin Templeton, Pimco, and Phillips Edison are all great managers just to name a few, but not all managers are created equally. Make sure that your investment managers have your best interests in mind, and make sure that they charge a fee suitable for the services offered. Ultimately a management fee directly affects your bottom line, so make sure that your investment manager is good at selecting investments, minimizing risk, and isn’t charging too much.

Structure: There are lots of ways to bundle or structure investments. The more complex the structure, the more costly it becomes to you the investor. An annuity can be a great example of an expensive structured investment. For example, most annuities bundle mutual funds, which bundle stocks and bonds. Often times these annuities come with special guarantees or riders which can be very expensive. I’m not saying that annuities aren’t worth owning. However be careful that they or any other investments you buy don’t have an overly high cost structure.

There are tens of thousands of mutual funds, stocks, and other investments available to you. As you can imagine, it becomes a very cumbersome task to evaluate these funds and know who to do business with. This is where a personal financial planner comes into play. I specialize in creating suitable investment strategies by first learning about your personal goals, risk tolerances, and then building a customized portfolio. If you have any other questions or would like to have a complementary portfolio review to make sure that PMS exists in your portfolio, just give me a call.