Sound Advice to Avoid a Life-Changing Mistake

Background

Our client’s previous advisor had built a diversification plan that focused only on tax minimization, leaving our client vulnerable with a large portion of her portfolio in a single stock. Worried a lack of foresight might hurt her investments’ potential, she sought a second opinion and engaged the LAMCO team for our expertise in portfolio diversification and focus on long-term success.

Solution

We started by conducting a complete evaluation of the security and noted the historic volatility of the stock. We built a customized analysis to do this, which overlaid that client’s cash flow needs and objectives with historic volatility to demonstrate why the existing approach was not prudent. Finally, our team constructed a new strategy, which accelerated the diversification and established a liquidity fund to meet cash flow obligations for the next 5 years.

Results

Within 9 months of starting this process, what every investor dreads happening, happened. The stock lost over 50 percent of its value. However, because of the collaborative approach followed, our client had diversified a majority of her exposure in the security and her lifestyle and objectives remained unchanged as a result.