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Five Questions to Help Determine if Your Financial Investments Are Receiving the Same Strategic Attention as Your Business

Few would argue that a lot has changed in recent years. Whether it’s how we work, travel or interact with others, the ways we have adapted are endless.

Similarly, it’s hard to believe that just a few years ago “stubbornly low inflation” and “lower for longer interest rates” were the prevailing economic narratives Persistently higher prices and the most ambitious interest rate hikes in five decades mean financial markets – just like people – have also been grappling with significant change.

Successful business owners have been proactively adjusting their operations because they realize what worked a few years ago may not be the best approach for today. When it comes to investing, a different business cycle driven by different fundamentals means stale portfolio ideas may not be serving your portfolio efficiently.

This begs the important question: Has the strategy for your financial investments evolved?

Below are five essential questions to help determine if your financial investments are receiving the same strategic attention as your business:

1. Do I understand what's in my portfolio and what role each investment plays?
Many investors are familiar with the general percentage of stocks and bonds in their portfolio – for instance, the 60/40 strategy, which invests 60% in stocks and 40% in bonds. While this may make sense on the surface, a more detailed look “under the hood” can reveal significant gaps and opportunities to improve asset allocation. After all, the first step in gauging how to improve a process is understanding how it works.

Your portfolio is your “team” of investments. Having a clear sense of the “players” and their “strengths” is critical to gauging how they may work together in different environments. Whether it be small-cap stocks for their long-term growth potential or long-term bonds to adjust for interest rate dynamics, the playing field is constantly evolving. Do you understand how your “team” of investments is working for you?

2. Are my financial market investments aligned with my business operations?
Are you thinking about your investments in a silo? It’s easy to forget the important difference between investment management and comprehensive wealth management. Consider this: the many aspects of your business may each require a different skill set to manage, but your understanding of the business as a whole is what helps you coordinate each piece into an efficiently run operation. The same is true with your wealth. Working with a planning mindset as you synchronize your investments with your estate, legacy, retirement or business goals means connecting the bigger picture.

3. Am I as diversified as I think I am?
Asset classes to an investment portfolio are like tools in a toolbox – do you have the right tools for the project ahead? This is, of course, an extraordinarily difficult question since the future is full of uncertainty. What we can do, however, is take a mosaic of economic and historical cues to shed at least a sliver of light on the path ahead.

One fascinating investment phenomenon is that when the road ahead seems foggy, many people tend to focus their investments in areas where they feel more comfortable. While this may feel like taking risk off the table, it really means depending more on fewer tools and may actually increase the risk of not meeting your long-term goals. After all, if we were less certain about the project ahead, why would we look to abandon some tools altogether? We would likely be better off carrying different tools that work well for different projects. Does your portfolio have the proper amount of each asset class tool?

4. Is my allocation adjusted for a shifting economic cycle?
Just as certain plants thrive in different seasons, select investments tend to perform relatively better in different economic environments. Making careful, thoughtful, and proactive adjustments that align with your investment blueprint is an important aspect of tending to your portfolio.

After more than a decade of near-zero interest rates, slow and steady growth, low inflation and synchronized global economies, the past few years have seen each of these narratives flipped upside down. This means the season ahead is unlikely to resemble the previous one. This also means the exact investments that thrived during the past business cycle may not be best suited for the next. Are your investments prepared for a new season?

5. Are my investments benefiting from "tax alpha"?
Taxable investments are quite a double-edged sword since greater investment gains typically mean greater taxes. Surprisingly, turning losses into future tax savings is often not discussed. Also known as tax loss harvesting, selling a down asset and buying a suitable substitute can keep investors participating in the market while harnessing meaningful tax benefits.

The same is true of prudently realizing gains when asset allocations need adjusting – holding onto an investment just because of taxes could mean foregoing a better market opportunity. Being proactive and intentional about when, where and how to realize taxable gains and tax-saving losses can provide a meaningful source of “tax alpha” to long-term investors.

Do these questions make you curious about the positioning of your own portfolio? If so, you are likely to benefit from a conversation with a highly-qualified wealth management advisory team. By combining a breadth of technical expertise with a deep understanding of your important goals, an experienced team of wealth management advisors should include these essential questions as frequent discussion points as they uncover opportunities to add tremendous value across investments and the broader wealth planning experience.

Stratview Wealth Management harnesses over three decades of experience, client presence in over 40 states and a dedicated team with the highest industry designations. It’s our goal for our clients to 1) understand how their investments are tightly coordinated with their broader planning, 2) understand their dedicated team is prepared to evolve these strategies over time and 3) feel empowered as good stewards of their assets to spend more time doing what they enjoy most. We welcome a conversation to discuss how we can help maximize and protect the legacy you have worked so hard to create.

William R. Moore III uses Stratview Wealth Management as a marketing name for doing business as a representative of Northwestern Mutual. Stratview Wealth Management is not a registered investment adviser, broker-dealer, insurance agency or federal savings bank. Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee, Wis. (NM) (life and disability insurance, annuities, and life insurance with long-term care benefits) and its subsidiaries. William R. Moore III provides investment advisory services as an advisor of Northwestern Mutual Wealth Management Company® (NMWMC), Milwaukee, WI, a subsidiary of NM and federal savings bank. William R Moore III is an Agent of NM. William R. Moore III provides investment brokerage services as a Registered Representative of Northwestern Mutual Investment Services, LLC (NMIS), a subsidiary of NM, registered investment adviser, broker-dealer and member FINRA and SIPC. All investments carry some level of risk, including loss of principal invested. No investment strategy can guarantee a profit or protect against loss. This publication is not intended as legal or tax advice. Financial Representatives do not render tax advice. Consult with a tax professional for tax advice that is specific to your situation.

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