Infographic: Portfolio Evaluation Issues for High Net Worth Investors

Portfolio Evaluation Issues for High Net Worth Investors

Regular portfolio evaluations are especially important for high net worth investors due to:

• Size of portfolios
• Potential complexity of overall financial situations
• Target Asset Allocation vs. Actual

Over time movements in the stock market can throw your asset allocation out of whack. You might be taking on too much or too little risk compared with your risk tolerance, your goals and time horizon.

Review your actual asset allocation vs. your target allocation on a regular basis to ensure your portfolio remains on track.

Evaluate Individual Holdings

Review and evaluate individual holdings periodically to determine if they're still a good fit in your overall portfolio. For mutual funds and ETFs, how does each compare in terms of relative performance to their peer groups?

Evaluate holdings against appropriate benchmarks for their asset class.

Asset Location

Types of holdings in different types of accounts can be important. If you hold income-producing investments, it might make sense for high net worth investors hold these assets in tax-deferred accounts like an IRA to avoid current year taxation.

While taxes shouldn’t drive your investing decisions, being tax-smart can pay off for high net worth investors.

Employer Stock

HNW investors may find themselves with concentrated positions in their employer stock due to options, restricted stock units received or matching within their 401(k) made with employer stock. It’s important for these investors to ensure that the rest of their portfolio’s allocation offsets these concentrated positions.

Regular Reviews

A portfolio evaluation should be done as part of a regular review. Investors should work with a trusted financial advisor who can help assess not only where their investments stand, but how this fits into their overall financial situation. This is critical for all investors, but especially for high net worth investors.