By Resurgent Financial Advisors
Diversification is one of the first lessons many investors learn.
It’s a principle taught in textbooks, quoted by advisors, and often viewed as a sort of golden rule for portfolio construction. Spread your risk. Don’t put all your eggs in one basket. Keep it balanced.
The problem? Diversification is not the same as alignment.
A portfolio can be diversified across asset classes and still be misaligned with your life. It can have a healthy mix of stocks and bonds, yet create unnecessary tax drag. It can reflect textbook balance while completely ignoring what you care about most.
That’s why we ask a different question at Resurgent: Is your portfolio aligned with your goals, your values, and your reality?
Let’s unpack what that means – and why it matters more now than ever.
The Illusion of “Set It and Forget It”
There is a kind of comfort in believing your portfolio is “taken care of.” Maybe you have a diversified allocation. Maybe it was reviewed a few years ago. Maybe it still performs well on paper.
Still, life changes. Markets evolve. Laws shift. What made sense when you were 52 may be entirely off-base at 63.
A portfolio review is not just about updating numbers. It’s about asking whether those numbers still reflect what matters to you.
Are you entering a new phase of life – retirement, business exit, estate planning?
Has your risk tolerance shifted due to health, family, or economic conditions?
Have your values changed? Are you clear on what your money is really for?
These are not abstract questions. They drive the way your portfolio should be constructed.
Diversification vs. Personalization
Diversification reduces risk by spreading your assets across various sectors, geographies, and asset classes. That’s smart. It helps protect against the unexpected.
However, diversification without personalization often leads to inefficiency.
Imagine owning tax-inefficient investments in taxable accounts, while holding cash in tax-deferred IRAs. Or having growth-oriented assets in the wrong places while income needs go unmet. Or worse, holding investments you no longer understand – or believe in – just because they fit a model.
True alignment requires more than just mathematical balance. It requires financial planning that matches your lifestyle, tax profile, family structure, and long-term intentions.
That is where many portfolios fall short. They are diversified, but they are not designed.
The Hidden Costs of Misalignment
A misaligned portfolio may not trigger red flags right away. Often, it shows up subtly – in missed opportunities or silent inefficiencies.
Here are a few we see frequently:
Tax Location Mistakes
Not all accounts are taxed the same way. Holding dividend-heavy funds in a taxable account could create unnecessary annual tax bills. Meanwhile, tax-efficient ETFs might be better suited there.
On the other hand, high-growth assets may belong in Roth IRAs, where future gains are tax-free. Bonds or REITs? Often better inside tax-deferred accounts like traditional IRAs.
When asset location is ignored, clients end up paying more in taxes than necessary – often without realizing it.
Overlapping Exposure
Just because you own multiple funds does not mean you are properly diversified. Many portfolios hold different funds with similar holdings, resulting in concentration disguised as variety.
It’s not uncommon for investors to own five different large-cap growth funds that all track the same 50 companies. That kind of overlap can inflate risk and reduce the benefits of true diversification.
A detailed portfolio x-ray often reveals patterns that were not visible at first glance.
Outdated Risk Profiles
You may have been a growth investor 10 years ago. That does not mean your portfolio should look the same today.
As retirement nears, or major goals approach, your tolerance for volatility might decrease. You might need to build more stability into your income streams, or rebalance in response to changing economic realities.
Risk is not just a number on a questionnaire. It’s a reflection of what keeps you up at night – and what gives you peace of mind.
Ignoring Purpose
We work with many clients who say, “I just want to make sure I don’t run out of money.”
That’s a good starting point. But it’s not the whole picture.
Do you want to travel more in early retirement? Support children or grandchildren? Give more generously? Exit your business with options?
Each of these decisions carries financial implications – and your portfolio should reflect those preferences.
Alignment is about making sure your money works for the life you actually want to live.
Investing Through a Planning Lens
We believe investment management should always be nested within a larger financial plan. Your portfolio is a tool – not the goal itself.
When we work with clients, we look at the entire picture:
- Income sources (Social Security, pensions, business income)
- Tax brackets and upcoming changes
- Health care costs and Medicare strategy
- Required minimum distributions and estate planning
- Charitable giving and legacy intentions
We then construct portfolios designed to support those realities.
For example, if charitable giving is important to you, we might prioritize appreciated stock donations or Donor-Advised Fund contributions. If you are in a high-income year, we might delay certain asset sales or rebalance more tax-efficiently. If your estate plan involves generational wealth transfer, we may recommend assets with different growth and risk profiles.
No two clients are alike. Your investments shouldn’t be either.
When Was the Last Time You Looked Under the Hood?
It is easy to get used to the rhythm of performance reports and market commentary. Those tools are helpful – but they don’t always tell the full story.
The real question is whether your portfolio is designed with your life in mind.
Are you confident that your current allocation supports your goals? Do you know how your investments align with your tax strategy? Do you feel peace of mind – not just about returns, but about the life those returns are meant to fund?
If you are not sure, that’s okay. Most people aren’t.
At Resurgent, we work with clients to bridge the gap between financial theory and financial reality. We take the time to understand who you are, where you are going, and how your money should support that journey.
You deserve more than a well-balanced portfolio. You deserve a well-aligned one.
If it has been a while since your investments were reviewed through a planning lens, now is a good time to start.
