Video Reports

Embed this video

Copy Code

Link to this video

Get LinkEmbedLicenseRecommend (-)Print
Bookmark and Share

By Jason Stipp and Christine Benz | 05-28-2014 12:00 PM

4 Signs You May Need a Portfolio Makeover

Portfolio sprawl, portfolio neglect, life events, and the transition to retirement are big signals that investors should get under the hood of their portfolios.

Jason Stipp: I'm Jason Stipp for Morningstar.

Christine Benz, our director of personal finance, will be making over five portfolios June 2-6 as part of our Portfolio Makeover Week. If you weren't one of the lucky ones to get a portfolio makeover this year, she still has some tips on when you might want to do a makeover yourself. She is here to share those today.

Thanks for joining me, Christine.

Christine Benz: Jason, great to be here.

Stipp: One of the first problems that you see when you get portfolio makeover requests is portfolio sprawl. How bad is sprawl among some of the makeover requests that you've seen?

Benz: This is the most frequent problem that I encounter. People will send in their Excel spreadsheets with their portfolios, and it's not unusual to see 70 or 80 holdings, and it's easy to see why this happens. People have multiple account types. They might have IRAs and 401(k)s, and if you have two spouses in a household, both of whom are saving in their respective accounts, you can see those number of holdings compounded even more.

This is a big issue. It's one that I always try to address when I do portfolio makeovers.

Stipp: What are some of the problems that can arise when you have so many holdings?

Benz: A couple of the big ones. One is just the oversight responsibilities when you have many different holdings to stay on top of. This is particularly an issue where you've got individual stocks, which require more oversight on a regular basis, as well as actively managed funds, where you've got to keep an eye on the manager, the structure of the fund company, and so forth.

It can be an issue when you've got too much to keep track of, too many statements flowing into the house or into your email box. It can be difficult from an oversight standpoint.

Stipp: If you have a lot of holdings, you could own most of the market, but you might be paying more fees than you need to for such an overall portfolio.

Read Full Transcript

{0}-{1} of {2} Comments
{0}-{1} of {2} Comment
  • This post has been reported.
  • Comment removed for violation of Terms of Use ({0})
    Please create a username to comment on this article