Personal Finance

Top 5 reasons you need a portfolio review

Learn about the importance of reviewing your portfolio, and how it can benefit your complete financial picture.

Portfolio reviews are a critical part of the investment process. If you haven’t reviewed your entire portfolio with your advisor, you could be neglecting these potential problems:
  1. TAXES: A portfolio review can reveal some really simple ways to reduce taxes on your investments. One common issue often discovered during a review involves clients not choosing the best account based on the investments’ tax treatment. For example, clients often fail to use their IRA accounts to hold tax inefficient high dividend paying stocks and bonds or mutual funds with high turnover rates. Occasionally, we even see IRA accounts with municipal bonds. This is almost always a bad idea because it has the effect of converting tax-free interest into taxable ordinary income when it’s ultimately distributed from the IRA.
  2. PORTFOLIO OVERLAP: A portfolio review frequently uncovers mutual funds that appear to be different but that actually hold the same exact stocks. This is particularly true with large cap stock funds or index vs. actively managed funds. Clients often judge a mutual fund by its name rather than its holdings. Overlap can significantly increase the risk of a portfolio without a client even realizing it.
  3. PERFORMANCE & EXPENSES: Buying and holding is a good investment strategy. However, a portfolio review can often reveal if an investment has been held on to so long that it’s significantly underperforming similar investments, or if cheaper and better performing investment options are available.
  4. ASSET ALLOCATION: Some of our clients have accounts at other firms. However, problems can arise when advisors aren’t kept informed about their outside investments. Portfolio reviews can show if a client’s total asset allocation (the total amount invested in stocks and bonds across all accounts) is not properly balanced. Not having the ability to see how all accounts are performing can put your portfolio at risk without you realizing it.
  5. BENEFICIARIES & OTHER ACCOUNT ISSUES:  A comprehensive portfolio review can go beyond the investments themselves. Reviewing beneficiary records is very important in making sure your assets are passed to the appropriate individuals. We have all heard the story of the divorced husband who gets a check in the mail from his ex-wife’s account after her death because she forgot to change her beneficiaries. Also, registration titles on accounts, like trusts, can be labeled incorrectly which can lead to legal and tax issues down the road.
These are only a few reasons why a simple portfolio review is worth a small amount of your time. I would also be remiss if I didn’t mention that if you have never had a full financial plan, there is no better time than now to receive this important analysis. Your team at Janney can review your portfolio with you and provide recommendations on the best strategies moving forward. Contact your advisor today.

Michael Repak, CPA/PFS, JD
Vice President/Senior Estate Planner

Mike provides advice and guidance in all aspects of financial, tax, and estate planning issues. He earned his Bachelor’s degree from William Paterson University in Wayne, New Jersey, and has a Master’s degree from the University of Wisconsin in Madison, Wisconsin. He has a CPA/PFS credential, and Series 7 and 66 securities licenses. He received his J.D. from the University of Florida and his LL.M. in Tax Law from NYU. 

He has been an adjunct professor in the MBA program at Temple University and is a sought-after speaker for professional conferences and events. He is also frequently featured as a Money Doctor on, the public education site of the American Institute of Certified Public Accountants. Mr. Repak has served on several non-profit and civic boards, is a graduate of Leadership Philadelphia, and a member of the Union League of Philadelphia.

Janney Montgomery Scott LLC, its affiliates, and its employees are not in the business of providing tax, regulatory, accounting, or legal advice. These materials and any taxrelated statements are not intended or written to be used, and cannot be used or relied upon, by any taxpayer for the purpose of avoiding tax penalties. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

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