Is Your Investment Wearing a Costume?

3 Questions to Ask when Reviewing your 10/31 Statements

The season of ghouls, vampires, candy corn and pumpkin spice lattes is upon us. My sweet tooth is fully alert. I’ve spent my recent weekends assembling components of my 3-year-old’s construction man costume. This can only mean one thing: Halloween is here.

This year, I’m encouraging my clients to take a closer look at their investment statements. And when I say “look,” I mean look at them. Many clients report a tendency to let their eyes drift to the bottom-right-hand corner for a cursory glance at the “Total” before filing (or deleting). While this is far better than ignoring a statement altogether, I’m a firm believer in closer consideration.

So why the emphasis on examination? As I see the kids on my street donning costumes in the pursuit of candy, I consider the world of monthly statements. They often contain detailed reports of complex holdings, countless transactions, and confusing columns of data. Amidst the density, it can be easy to lose sight of the basics. To further the challenge, many investments (or products) are identified by jargon-laden symbols, branded names, or contract numbers. The combination of these factors can often make it feel like our investments are wearing costumes.

With a keen eye and thoughtful consideration, you can see past the costumes and gain a better understanding of your financial holdings. As you review your 10/31 statement (spooky!), here are some basic questions to ask yourself:

  1. What do I own? Your account may contain investments, insurance products, investment/insurance hybrids. These holdings can be made up of stocks, bonds, mutual funds, ETFs, annuities, life insurance policies, or cash equivalents. When you strip away the labels, what do you truly own, and what does it represent? Is it appropriate for your goals, risk tolerance, and values?
  2. How much is this costing me? Ongoing costs are easy to miss in the mix. Look for built-in expense ratios, riders, wrap/AUM fees, transaction charges, or advice fees. Add it all up and get a sense for your annual “carry cost.” Compare this to industry norms or ask for a second opinion if it seems too high.
  3. Can I explain this to someone else? If your holdings are too complex to understand or explain to a loved one, consider doing some research or collaborating with your advisor for ongoing education. After all – this is your money and your future. Don’t let jargon (or “costumes”) intimidate you. If you don’t know, ask.

As always, let us know if you have any questions.


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