Money Managers Live

What To Ask When Hiring a Financial Adviser

Written by Dave Young, President & Founder of Paragon Wealth Management

For some reason, it has always been easier to lose money than it is to make it and keep it.

Managing your own investments can be done successfully, but it is not easy. First, it requires a time commitment to research and track your investments. Second, it requires discipline to stick with your strategy through challenging times. Third, and most difficult, it requires you to remove emotion from your investment process.

Studies have shown that most investors would be better off with the help of a financial adviser. Unfortunately, finding the “right” adviser is difficult. Most investors hire someone they “trust”. However, “trust” is very intangible and difficult to quantify. Also, the size of the firm or familiarity of the brand name does not indicate the quality of the advice provided.

To make sure you don’t get stuck with a salesperson when you are really looking for an adviser, make sure you ask these four questions:

• Fiduciary? Fiduciary advisers have a legal obligation to put your interests ahead of their own.  A minority of all financial advisers actually meet the fiduciary requirement.
• Experience? How many years have they been managing money? Ideally, your adviser has experience investing in both good markets and bad markets. In the final analysis, you are paying an adviser for their experience.
• Track record? Legitimate advisers will be able to show you a clear report of what they’ve done for their clients over the years. Any adviser who refuses to show you their past performance should be crossed off your list.
• Conflict of interest? By working only with advisers who are paid through management fees and not commissions you can make sure their interests are aligned with yours. You should never own a product with a surrender charge.

As I mentioned, it has always been easier to lose money than it is to make money. Implementing these tips will help you find a great adviser.

Disclaimer
Paragon Wealth Management is a provider of managed portfolios for individuals and institutions. Although the information included in this report has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy. All opinions and estimates included in this report constitute the judgment as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Past performance is not a guarantee of future results.

Active vs. Passive Money Management

Watch this short video to listen to Dave Young and Nathan White discuses active vs. passive money management.

In this video you will learn:

-the difference between active vs. passive money management.
-which strategy is doing better right now and which has done better in the past.
-which strategy does better in volatile markets.
-the disadvantages and advantages to each strategy.

Disclaimer
Paragon Wealth Management is a provider of managed portfolios for individuals and institutions. Although the information included in this report has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy. All opinions and estimates included in this report constitute the judgment as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Past performance is not a guarantee of future results.

 

Money Management and Baseball

photo by laffy4k

Written by Dave Young, President of Paragon Wealth Management

Imagine yourself as a baseball player. 

First, your team gets a base hit, next you get a double. Then, another base hit. This is followed by a triple, and then you strike out. Then, you strike out twice in a row! Just about the time you are ready to abandon your team, they hit two home runs.

The moral of the story is you never know how the game is going to turn out unless you stay for the whole game. 

Asset management is similar to baseball because they both take patience and a sound long-term strategy to be successful.

At Paragon Wealth Management we have asset management services for our clients who have $200K to $1M to invest, and wealth management services for investors who have over $1M to invest. When investors see the returns our growth portfolio, Top Flight, has generated over the past 13 years, they get excited about them. Then, when the market goes through a downturn, and Top Flight goes through a mild downturn, they start questioning their investment strategies.

Paragon's Top Flight Portfolio has generated a total return of 421.46 percent versus 72.19 percent for the S&P 500 from January 1998 through February 2011. (see www.paragonwealth.com for full track record and disclosures.) 

It is important to understand the ups and downs that investors went through in order to capture those returns investors have seen since Top Flight's inception in 1998. 

Its also important to understand that investors who did not keep a long-term perspective and bailed out of their portfolios along the way, never saw those returns. 

It is only those investors who had the discipline to keep a long-term perspective who got the long-term returns.

For example, in four of the past 13 years, which is about 31 percent of the time, Top Flight underperformed the S&P 500. In two of those years, Top Flight declined and investors lost money. 

The investors who focused on the short-term during those times, bailed out of their portfolios. They were shaken out of their long-term investment strategy and ultimately hurt themselves by selling out of their portfolio.

In an ideal world Top Flight would always outperform and would travel a straight line of positive returns year after year.  

Unfortunately, we do not live in a perfect world. Reality is more like two steps forward and then one step back over and over...

With Top Flight we never know in advance when we are going to under perform the market or when we are going to "hit a home run." Although there are no guarantees, we do believe that if we keep stepping up to the plate and executing our investment strategy that we are going to outperform more than we underperform. Over time we believe that disciplined execution of our investment strategy will deliver outsize results. 

However, that means we have to keep stepping up to the plate, and we have to consistently follow our investment strategy.

That is how Top Flight has generated returns almost six times more than the broad market as measured by the S&P 500 over the past 13 years.

If investors want those long-term returns, then they must "stay for the whole game". 

Paragon Wealth Management is a provider of managed portfolios for individuals and institutions.  Although the information included in this report has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy.  All opinions and estimates included in this report constitute the judgment as of the dates indicated and are subject to change without notice.  This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.  Past performance is not a guarantee of future results.