Financial Planning

Financial Advisors Who Buy Individual Stocks and Bonds

By  Brian Thorp

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While low cost index mutual funds and ETFs have surged in popularity among do-it-yourself investors and financial advisors alike, investing directly in individual stocks and bonds could offer many potential benefits depending upon your unique circumstances.

But investing in individual securities comes with additional risks and requires considerable time, knowledge and discipline to thoughtfully build and maintain diversified portfolios of stocks and bonds to achieve desired outcomes.

If you’re preparing to hire a financial advisor, should you hire an advisor who will invest your money in index funds? Or is hiring a financial advisor who invests directly in individual stocks and bonds right for you? Let’s learn more about financial advisors who buy individual stocks and bonds when building portfolios for their clients to help you decide which type of advisor you may want to consider.

📈 Get to Know Financial Advisors Who Buy Individual Stocks and Bonds

This page is organized into sections to help you quickly find the information you need and get answers to your questions:

  1. Q&A with Financial Advisors Who Buy Individual Stocks and Bonds
  2. Get Answers to Your Questions About Investing in Individual Stocks and Bonds
  3. Browse Related Articles

– Financial Advisors Who Buy Individual Stocks and Bonds –

Three Questions with Scot Johnson of Adell, Harriman & Carpenter, Inc.

We asked Houston-based financial advisor Scot Johnson to answer three questions why they choose to build portfolios of individual stocks and bonds for their clients.

Q: Why do you believe building portfolios with individual stocks and bonds is a thoughtful approach for investors?

Scot: Clothing is a good analogy here. When you buy something off the rack, it may not quite fit the way you’d like. A tailor can help with alterations, but there’s only so much you can do there. If, on the other hand, clothing is made for you, it’s going to fit exactly the way you want. That’s the way we look at investment portfolios. With guidance from our clients, we construct custom portfolios that fit each client’s return goals, time horizon and their stomach for how much the value of their overall portfolio can bounce around. Rough patches are inevitable and occur even during strong bull markets. One key benefit to owning individual bonds is that they mature, and that feature helps us synch up a client’s anticipated cash flow needs with cash arriving in their portfolio. On the stock side, choosing individual companies allows for more flexibility in terms of what we own and how much of it we own. In certain instances, it’s also important to clients that we have the flexibility to not own certain companies.

Q: How do you decide when it’s time to rebalance your allocations and why?

Scot: We put a lot of thought into designing client portfolios for the long haul, and that includes being able to weather the inevitable and often unforeseen turbulent periods. Those “long haul” portfolios will evolve over time with life circumstances like adding kids to the household or nearing/entering retirement. We need to make sure clients are taking enough risk to achieve their goals, but they also need the peace of mind to sleep at night. We’ll take more risk when the market presents opportunities to do so prudently. We firmly believe the long-term trend in stock prices is upward as strong management teams improvise around, adapt to and overcome the challenges before them. We looked at the pandemic-induced pullback in 2020 as a prime example of when it would reward investors to add risk. When we think a period of opportunity has run its course, we’ll move back toward our “long haul” portfolio for each client. We’ll also move back toward each client’s “long haul” portfolio when market movements change portfolio risk on their own. After a strong run for stocks in 2019, it made sense for many of our clients to trim stock exposure back toward more of a “long haul” setting.

Q: What are the most important factors you consider to determine the initial asset allocation for a new client?

Scot: From our point of view, the single most important factor to consider is when a client needs to tap the resources in their portfolio to fund spending. The closer that spending is to today and the higher the priority of that spending, the more conservatively those funds need to be invested. Once we can plot out the dollars needed and the days, months or years they’re needed, then we have the framework for how to put the portfolio to work delivering on those goals.

Get to Know Adell, Harriman & Carpenter, Inc.:

Adell, Harriman & Carpenter, Inc.

Houston, Texas

Your financial home for every season of life.

Houston, Texas

Your financial home for every season of life.

Areas of Focus

  • Crisis Management
  • Estate Planning
  • Family and Money
  • Financial Life Planning
  • Giving

View Adell, Harriman & Carpenter’s profile page on Wealthtender or visit their website to learn more.

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About the Author
Brian Thorp, Founder and CEO of Wealthtender profile picture

Brian Thorp

Founder and CEO, Wealthtender

Brian and his wife live in Texas, enjoying the diversity of Houston and the vibrancy of Austin.

With over 25 years in the financial services industry, Brian is applying his experience and passion at Wealthtender to help more people enjoy life with less money stress.

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Disclaimer: The information in this article is not intended to encourage any lifestyle changes without careful consideration and consultation with a qualified professional. This article is for reference purposes only, is generic in nature, is not intended as individual advice and is not financial or legal advice.

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