Jonathan D’Agostino: And I was thinking Kevin, with you, we came out of a period when back in the 90’s when everybody was a day trader. Everybody knew how to pick of a stock, you remember? Whether you were someone who was a hairstylist and buying Microsoft and selling out, it was amazing. Everywhere you went; everybody was buying and selling stocks. You know, as far as you’re training goes, I mean I’m assuming that today people are less inclined to do something like that but how do you deal with the client that comes in and they want to pick the stocks or the funds. What kind of advice do you give?
Kevin Chau: Usually if that tie comes in and they have a fair amount of knowledge. We want to work with them. We want to educate them on the risk of individual securities. You may have the best company in the world but if that first news comes out and you have a major concentration of that one company in your overall assets, it can hurt you in the major way.
So we preach diversification, we talked in about asset allocation, how to allocate their assets the right way. So even though you’re taking some risk with individual stocks, you should also have some investments in the long term bonds. I can produce a certain amount income for you that can again off set any of the market bonds totally set that they are out there.
We also want to talk to them about limiting the amount that you put into each individual name. Efficient portfolio, you should at least have somewhere between 30-50 names in the stock portfolio to give more diversification. We wanted to educate them about getting involved for different industries. Back in the 90’s, a lot of folk’s diversification meaning two or three text stocks. Oh, I’m diversifying, I have Microsoft, Dell, OAL and they consider that as diversification whether everything is one sector. So we want to tell them that you need to be more diversify, you got to have various sector. You can’t be all in technology; it can be all in let’s said health care, financial, and industrial. You got to have investments in each area because what might be hot this year may be cold the next.
Jonathan D’Agostino: So you probably have different clients. You probably have the clients that tell you, “Kevin, here’s my portfolio, here’s my trust.” You do what you think is best, stay in touch, let’s communicate and probably have those clients and then you probably have those clients that use you more as a vehicle, say this is want I want to do and this is what I want you to buy this sort of what you sell, which do you prefer?
Kevin Chau: Well usually we like the first.
Jonathan D’Agostino: But can you accommodate the second?
Kevin Chau: Absolutely and even though ones that I’d like to self direct most of the investments here. We can work along with them. We can advise them, what have you on that particular investment and they will leave it up to them to make final decision but we also want to keep in mind that they shouldn’t take too much risk no mater how much you love a certain company. We’ve seen it time and time again where people get over weighted that they put the bulk of their into one particular company, it go south. Now they are, their whole retirement plan or their state plan.
Jonathan D’Agostino: Do you ever feel you need to protect yourself against a client who’s making a very risky incorrect move?
Kevin Chau: Well we take meticulous notes. Especially when they are dealing with accounts such as a trust account. A lot of our trust accounts, we put down investment policies, suggestion for them for them to do, what they should do, they shouldn’t do and it helps. It gives them a guideline so if they really, really want to do something out of the norm let’s say and we think that they are taking extensive risk. At that point, we might even ask a client to may be go to another institution worst case because if they are with us we want to make sure that they are doing the best things for the long-term growth of their assets and make sure that we can preserve those assets for their loved ones.
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