Study Finds that Most Investor Portfolios Have Significant Shortcomings

Dunston Financial Group recently attended the National Association of Personal Financial Advisors (NAPFA) annual conference in Seattle. As expected, we were not disappointed by the quality or substance of content. We are honored to be a part of such a collegial and intellectually stimulating community of fee-only financial planners.

Several things stood out at the conference. One of which was a set of findings put forth by BNY Mellon. In an attempt to ascertain the health of investor portfolios, BNY Mellon studied a large sample size of portfolios and found that most portfolios had significant shortcomings:

1. 89% of investor portfolios were missing asset classes
2. 89% were lacking an overall portfolio plan
3. 86% followed or fled a trend too late
4. 83% of portfolios were subject to sector bets that the investor did not know were taking place
5. 78% of portfolios didn't have enough or held too many holdings
6. 78% of investor portfolios had unnecessary or unknown portfolio risk
7. 75% had little to no tax management
8. 68% of portfolios were subject to hidden costs

We weren't surprised when we heard this given that we regularly encounter such findings when analyzing portfolios on behalf of our own clients. Such shortcomings can have serious consequences for investors' goals, including goals related to retirement and long-term wealth accumulation. When was the last time you had a portfolio checkup? It's always better to catch such issues sooner rather than later.

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