As someone who has achieved personal and professional success, you have numerous options for determining how your wealth will be managed, preserved, and distributed.

Some people like to take on the work themselves, while others seek the services of an experienced Sarasota portfolio manager. It’s a highly personalized decision and one that you should take very seriously because it can impact your financial well-being for the rest of your life. 

In this article, we will examine the important criteria you should consider when you vet financial professionals who provide planning, investment, and risk management advice. We’ll also explore the pros and cons of active and passive portfolio management. Each type of management has its unique characteristics and benefits, which can make your selection decision that much more difficult.

How your portfolio is managed isn’t just about your return on investment; it’s about aligning your personal goals, time horizons, and risk tolerance with your investment options.

A Look at Active Portfolio Management in Sarasota

Active portfolio management means a hands-on approach taken by Sarasota investment professionals when they buy and sell investments to maximize returns while managing the associated risk. 

Active portfolio management is the opposite of passive management, a buy-and-hold strategy using exchange-traded funds and mutual funds.

During periods of market volatility, active portfolio management can be beneficial due to its responsive approach. Unlike passive strategies that rely on fixed allocations, active management will change in response to market conditions. 

It’s important to note that active portfolio management requires substantial research, analysis, and decision-making to build portfolios that have the potential to outperform various market indices.

Here are some advantages and disadvantages of this approach:

Pros of Active Portfolio Management:

• Active management seeks to outperform the market, which can result in better returns compared to passive strategies.
• Portfolio managers react to market conditions and economic events, making adjustments that can improve investment performance.
• Active managers can tailor portfolios based on your current circumstances, goals, and risk tolerance. 
• Active portfolio management can reduce risk by responding to market conditions – for example, selling stocks and reinvesting in short-term bonds and cash equivalents. 

Cons of Active Portfolio Management:

• Active management can incur higher fees and transaction costs, affecting overall net returns.
• Success in active management is not guaranteed, and poor decisions can lead to underperformance.
• Frequent buying and selling can generate capital gains taxes, impacting after-tax returns.
• Active management requires continuous monitoring and research, which is feasible for more sophisticated investors or professionals.

A Look at Passive Portfolio Management in Sarasota

Passive investing involves building and maintaining a portfolio of investments to mirror the performance of a specific market index or benchmark. Passive investment management is often called a ‘set it and forget it’ approach. If you are looking for a hands-off investment strategy focusing on long-term growth and a pre-defined investment trajectory, this might be an option for you to consider.

Read on to learn more about some of the advantages and disadvantages of passive investing. 

Pros of Passive Investing:

• Passive management typically has lower fees and other expenses than active management, which involves more frequent trading. 
• Passive portfolios may comprise multiple asset classes, providing built-in diversification that spreads risk.
• You can easily track the performance of your investments since passive strategies are based on publicly available data.
• The strategy relies on something other than the ability of a portfolio manager to pick the best stocks, thereby providing a more predictable investment experience.

Cons of Passive Portfolio Management:

• Passive portfolios are designed to match market returns, so they may not pursue higher returns than the market index they happen to track.
• Passive strategies don’t actively respond to changing market conditions, making you more vulnerable to prolonged downturns in the market.
• Passive portfolios may not be tailored to your investment goals or risk tolerance.
• You may be exposed to the full impact of a down market without an active management service.

Finding the Right Portfolio Manager Near You

Who you select to manage your wealth is one of the most important decisions you will ever make for your financial future. That’s why it’s critical that you use an objective, comprehensive evaluation process. 

When investors need help determining the best financial advisor, their fallback position is subjectivity – which advisors they like the best. Personalities rarely have anything to do with expertise and trust. Both are critical when you select an advisor who will influence or control how you invest your assets.

By focusing on these characteristics, you can make an informed decision when you select a portfolio manager who will invest your assets. 

• Understand how long they have provided investment management services to individuals like you. Degrees and certifications are also important. 
• Review the manager’s historical performance, paying close attention to their ability to generate consistent returns during a variety of market conditions.
• Evaluate their risk management approach and ability to protect your investments from substantial market downturns. 
• Determine if they are a financial fiduciary – the highest ethical standard in the financial service industry.
• Understand how they are compensated and if any potential conflicts of interest could impact you.
• Make sure the portfolio manager has a history of compliance.
• Review their FINRA and/or SEC compliance history to ensure they do not have disclosures.
• Understand their investment philosophy and how it aligns with your financial objectives and risk tolerance.
• Carefully review their fee structure to determine if it’s competitive and reasonable compared to other financial advisors.
• Discuss how they will communicate with you and the frequency of that communication. Accessibility may also be important to you.
• Look for a manager who tailors their strategies to your financial goals and circumstances.

Explore What Sets Sage Advisors Apart

Sage Advisors caters to a diverse clientele, including individuals from all walks of life, with a minimum of one million dollars in liquid assets available for investment. Our clients represent various genders, ages, ethnic backgrounds, and personalities. 

We believe in working collaboratively with our clients to craft tailored portfolios aligned with their financial circumstances and goals. The deeper our understanding of your requirements, the more effectively we can tailor a portfolio to meet your needs.

Recognizing that markets fluctuate, our approach is flexible and strategic, allowing us to respond to market changes quickly and efficiently. While some market conditions may persist over extended periods, our methodology is designed to be flexible and adaptive in various market conditions.

Using NASDAQ Dorsey Wright investment research as our foundation, we blend active and passive investment strategies, prioritizing client communications that describe our methods and tactics.

Reach out to us today to learn about the distinct advantages of Sage Advisors and how we can assist with pursuing your financial goals.