By Daniel Korleski, MBA
At Cobalt Private Wealth, we have seen our fair share of financial mistakes in the last three decades. This is because solid financial decision-making does not come naturally for most people, and implementing good financial habits is especially difficult when you aren’t even aware of the mistakes you may be making.
Below is a list of the biggest financial mistakes I see. If you find yourself making some of these mistakes, don’t worry. We often correct the mistakes we find in our clients’ portfolios.
1. Trying to “Time” the Market
When a person tries to “time” the market, they use strategies that demand a tremendous amount of energy and focus, and as such, these strategies are designed for the short term but cannot be sustained for the years required to build a stable portfolio. The best chance of success for your portfolio is if you stick to your long-term investment strategy and abide by realistic growth expectations.
2. Not Using Diversification Strategies
When you over-invest in one particular stock or sector, you expose yourself to unnecessary risk. This is because if that industry or company takes a hit, then your portfolio will also suffer disproportionate losses. By diversifying your portfolio and investing evenly in a wide variety of sectors and stocks, you can mitigate this risk.
When examining your portfolio, you also want to ensure that your portfolio aligns with your personal risk tolerance. Having a high-risk portfolio but a low-risk mindset can really spell disaster for you in the long term.
3. Choosing the Right Financial Advisor
For your own benefit, you want to choose a financial advisor who is held to the fiduciary standard, meaning that they will always work for your best interest and not be tempted to gouge you for their own financial gain. This is absolutely critical. When you work with a financial advisor who is not held to the fiduciary standard, you could end up paying high management fees for low returns. For example, we have had some clients who invested heavily in mutual funds but paid a fortune in load fees and management fees. In cases like these, the math doesn’t typically work out in the client’s favor.
4. Not Reviewing Your Estate Plan
You should be updating your estate plan frequently, especially when there are major life changes, such as marriage, the birth of a child, death of a loved one, divorce, or retirement. You also need to update your beneficiary designations as these major life events occur because if you do not, and something happens to you, you could accidentally leave your investment accounts to the wrong person.
Is Your Wealth Management Plan Comprehensive?
You need to have a comprehensive financial management plan that covers all your financial needs in order to prepare you and your family for a successful retirement. Not only do any of the aforementioned mistakes need to be corrected, but there are many financial details that need to be addressed as you carve out what you want to see in your future.
We can help you draft, fine-tune, and finalize your specific comprehensive financial plan to make sure that you are tracking toward a successful retirement. Reach out to me at danielkorleski@cobaltprivatewealth.com or 719-332-3863 to schedule a meeting.
About Dan
Daniel Korleski is the President & CEO for Cobalt Private Wealth, where he helps his clients grow, manage, and protect their wealth so they can work toward a stronger financial future. With over 30 years of experience in the financial services industry, Dan has served as the managing director for Investment Trust Company, chief investment officer for the Wealth Management Group at American National Bank in Denver, and regional investment manager for the Greater Colorado Region of the Private Bank at Wells Fargo, where he oversaw the management of over $2 billion. In 2008, he was appointed by the mayor of Colorado Springs to the City’s Investment Advisory Committee. Dan holds an MBA in investment management from Midwestern State University in Wichita Falls, Texas, a Bachelor of Science in Finance from Florida State University, and is a member of both the CFA Society Colorado and The Financial Planning Association.
Dan loves to give of his time to his community and has served as Chair of the Board of Trustees of Pikes Peak Hospice Foundation, the Board of Directors of Catholic Charities of Central Colorado, President of the Broadmoor Rotary Club and Vice President of the Board for the Pikes Peak Chapter of Trout Unlimited. Dan was born and raised in Spain and is fluent in Spanish. When he’s not working, you can find him traveling around the world with his wife of 23 years, Montse, fly fishing, golfing, and hiking with his golden retriever, Curro. To learn more about Dan, connect with him on LinkedIn.
