PERSPECTIVES Asset management has become more complicated Historically, asset management has been a stockbroker’s realm. Focused exclusively on asset allocation, the broker would look for good investments. Then he/she would call you for approval to execute a transaction. You’d then be the proud owner of a new security. If you’ve been paying attention recently, you’ve probably noticed this type of relationship is becoming obsolete. Sure, there are still some commissioned brokers handling client investments this way, but they’re a dying breed. Technology has given Joe Public a sense of empowerment. Have you heard of Robinhood? (the GameStop phenomena) This is just one of many companies that have come to the forefront offering apps for commission-free stock and ETF trades. It’s convenient and liberating to feel like you’re the boss of your money. Even better when it seems you don’t have to pay for it. Just pick up your phone to purchase the latest stock craze as you’re driving the down the road. No middleman to compensate. What many don’t realize is this investing approach can create unexpected problems. Ones you do pay for in the long-term. Investing isn’t only about picking stocks or mutual funds. There are many different types of investments. There are also varying account forms for buying and selling investments. Just like a bank CD isn’t the only way to get guaranteed fixed interest rates, building wealth comes with many options. Understanding how different choices may affect how much money you keep is important. A new frontier While asset allocation was yesterday’s focus, today we need to also consider tax allocation, account allocation, fixed asset allocation, and variable asset allocation. The tax code is over 70,000 pages. There are over 2,800 stocks on the NYSE; over 8,000 mutual funds; over 7,600 Exchange Traded Funds. There are more than 4,500 FDIC-insured commercial banks in the US. With all this choice, smart decisions get more complicated.
FINANCIAL FIGURES By Michael Shelton Executive Summary: Technology has given Joe Public a sense of empowerment.
Whether your goal is to get higher interest rates at a bank, or to determine if it’s appropriate to sell your investments inside of your account, a qualified financial consultant can help. What’s most important is that you find someone who can look at all aspects of your wealth. Neglect one area and you may find hard-earned money gone. There is no “do-over” with Uncle Sam, or bad investment decisions. Tread carefully. Michael Shelton is a financial retirement counselor. Reach him at michael@discover360 Financial.com vbFRONT.com / JUNE 2021 u
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