Getting Started on your Investment Strategy

Working with a Financial Advisor

There are many advantages to working with a financial advisor when you start investing. Financial advisors provide the expertise and guidance essential to successful financial planning. They understand the value of investing over the long term and the importance of diversifying a portfolio to manage risk and meet multiple objectives. Whether you’re a novice or an experienced investor, the professional guidance of a financial advisor can help ensure that your investments stay on track to meet your objectives.

Financial advisors can help you assess your financial goals, investment timeframe and risk tolerance and play an active role in monitoring your investments over time. They can analyze the risks and rewards of potential investments, allocate assets to meet your objectives, and adjust your portfolio as your needs change.

Advantages of investing with a financial advisor vs. investing on your own include the following:

• Objectivity in investment decisions — an advisor helps take the emotion out of investing
• Expert advice — an advisor provides professional guidance so that you don’t have to figure everything out on your own
• Professional oversight — an advisor is skilled at creating portfolios and monitoring your progress

What is the difference between a financial advisor and an investment manager?

The Role of a Financial Advisor

Financial advisors guide your investment decisions and work with you to build a portfolio that can help you reach your short-term and long-term objectives. Financial advisors can help you see your overall financial picture and understand your risk tolerance and investment time horizon. Your financial advisor will help with three of the most important components of investing: asset allocation, rebalancing, and investment manager selection.

The Role of Investment Managers

Investment managers build the portfolio and manage the securities held within your portfolio. Investment managers have various areas of expertise in selecting and managing a portfolio of securities across various investment styles (i.e. Large Cap Value, Large Cap Growth). New technology available to financial advisors has allowed them access to many investment managers that have typically managed money for larger institutional clients (i.e. pension plan assets, foundations, endowments). Active Management by an investment manager represents a goal of outperforming a stated benchmark (i.e. S&P 500, Russell 1000 Value).

Together, your financial advisor and investment managers strive to build your portfolio according to your objectives to help you achieve financial success.

What type of investor are you?

When you start investing, one of the first things you should do is figure out what kind of investor you are. Your investing personality will ultimately determine how you will invest your assets.

For example, if you are generally risk-averse, your portfolio may contain more conservative investments, thus limiting your growth potential. This approach is generally employed by those close to retirement and whose primary objective is asset preservation and income generation.

Conversely, if you have a higher tolerance for risk, you may want to focus on more aggressive investments that can increase your growth potential but also expose your investments to greater risk. Younger investors are typically more aggressive and their emphasis is more on growth over the longer term.

Here are some questions to consider in determining the type of investor you are:

• Would you be willing to accept more investment volatility in the short term for greater potential long-term gains?
• What are your financial goals over the next 5, 10 or 20 years – portfolio growth? college tuition planning? retirement income?
• If you invested $10,000 and the investment declined, would you liquidate it quickly, reallocate it or hold onto it for the long term?

Obviously, as you grow older, and/or your life and financial situation changes, so will your investor profile, which is why it is recommended that you periodically meet with your financial advisor to review your personal situation.

There is no guarantee asset allocation will produce favorable results or protect against a loss.