One way that investment advisers can clearly align their interests with investors is by putting their own money in the same investments that they recommend.
Roger Neustadt, co-portfolio manager of the Chantico Fixed Income portfolio, recently appeared on HealthyLife’s News@7 radio broadcast to discuss why investors should ask if advisers “eat their own cooking.” That will allow investors to see whether advisers are investing in the same stocks or mutual funds they recommend to clients.
“A financial adviser is supposed to invest your money to make more of it. Certainly there are many questions that can be asked related to investment theories or research services,” Neustadt told News@7. “But the most important question that people are not asking when they’re presented with a financial plan … is whether the adviser invests their own money in those.”
As a manager on Covestor’s marketplace, Chantico Advisors is investing its own money in a portfolio that is replicated in investors’ own brokerage accounts. In other words, portfolio managers on Covestor like Chantico are eating their own cooking.
In the radio interview, Neustadt also discussed his outlook on interest rates, and how ETFs compare with traditional mutual funds.
His full interview with News@7 is embedded below:
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