I’ve always been a proponent of investing in the same portfolios as clients. This demonstrates the high degree of conviction that is necessary to maintain the twin disciplines of monitoring and adjusting holdings based on current economic conditions. There are, however, some logical arguments against this mentality. An advisor who invests in the same investment portfolio as his clients is in essence double dipping, since his success at the firm level will be perfectly correlated to his personal holdings.
I think the advantages of investing in one’s home-grown portfolio far exceed the risks, but I’m curious to see how other RIAs feel about this issue. Please let us know!
Use the comment field below to respond to Ben Warwick. Do you invest in the same portfolios your clients do?