Diversification: Where Do People Go Wrong? | Mission Wealth Management

everybody talks about diversification every financial planner says they’re they’ve got you Diversified where do you see that being a problem not only do all advisers now really tout the benefits of of diversification but now all investors I think are True Believers in the benefits of it after what’s happened in recent Market years but where do people go wrong well first of all they don’t diversify enough they don’t look at multiple substyles within stocks they don’t look at small cap growth large cap value International emerging market so they don’t break down the high enough they also don’t add in additional asset classes that can really enhance their return and minimize volatility over time such as real estate such as hedge funds and then the big area that we see people making mistakes is they do not diversify by manager they might go to One Fund company so what do you mean by that they don’t diversify by manager well you know they might go to One Fund company and think that okay they have a small cap growth fund and a large cap value fund and a bond fund I’ll just diversify that way or maybe they’ll go to a large

institutional money manager that says hey we’re the best at all these C categories but Mike like in the medical field where you would go to a specialist for your heart a cardiologist or you’d go to an eye doctor for eye issues the financial World works very much the same there are firms that have a core competence in a very specific area of the marketplace