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Featured Advisor

Srbo Radisavljevic
Managing Principal/Investment Advisor

Edge Portfolio Management


State: IL

At Edge, a low client to advisor ratio allows for personal and customized service for each individual.  Our goal is to work as a team for each client to provide not only portfolio management but wealth coordination and financial planning.  We make every effort to have frequent communication with our clients and to provide timely response to calls and emails.  I also enjoy spending time with my wife and three kids, following Chicago sports, enjoying ethnic cooking, and serving as a school board member for Norridge School District 80.

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Principal Protection: A Professional's View

Doctors, lawyers and other professionals tend to be moderate investors, more concerned with principal protection than growth.

| BY Adriana Reyneri

Most high net worth professionals – a group that includes doctors, dentists, lawyers and accountants – are more concerned with principal protection than taking on investment risk to earn higher returns, according to a new Millionaire Corner report.

The emphasis on principal protection, shared by 63 percent of high net worth professionals, reflects the generally moderate investment style of most affluent doctors, dentists, lawyers and accountants, according to our e-zine, Effectively Servicing Professionals.

As a group, high net worth professionals – those with investable assets of $5 million to $25 million - are not big risk takers. The largest share – 58 percent - say they are “moderate” investors and 17 percent describe themselves as “conservative,” investors concerned primarily with principal protection, according to our research. Only 2 percent consider themselves to be “most aggressive” investors, while 23 percent say they are “aggressive.”

Accordingly, when choosing investments, high net worth professionals say they are most concerned (97 percent) with the level of risk associated with the product.  A closely related factor, diversity, is of second most importance to professionals (96 percent). Diversification can help investors reduce risk by enabling them to spread the risk over a variety of assets that perform inversely to each other.

Extreme market volatility over the past few years has fueled concerns over investment risk and principal protection, according to a recent blog by Walter W. Bettinger II, president and chief executive officer of The Charles Schwab Corporation.

“It is one thing when the market is consistently going up, but it’s when the market becomes choppier that we truly come to know the level of risk we are comfortable taking,” said Bettinger.
“The risk management conversations we are having with clients tend to focus on three things: continued uncertainty in Europe and what that might mean botheconomically here in the U.S. and for individual portfolios, finding the right balance of portfolio risk versus yield, and protection strategies for clients who are nearing or in retirement.”

The tax implications of investments are also a top concern of high net worth professionals. Our research shows that doctors, dentists, lawyers and accountants tend to worry more about tax increases, retirement security and the global economic situation than total high net worth investors. More than three-fourths of the professionals say they are paying more attention to the world economy because it is having a greater impact on their wealth than in the past.

High net worth doctors, dentists, lawyers and accountants are also relatively downbeat about their personal finances.  Only 41 percent feel their financial situation is better now than it was a year ago, and only 38 percent expect things to improve after the general election in November.  Given current political and economic uncertain, both home and abroad, it’s no surprise professionals favor principal protection over growth.