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Due Diligence

Questions Every Investor Should Be Able to Ask, and Get Answered.

The right questions separate thoughtful advisors from the rest. We can answer all of them, with documentation. Here are the seven we believe every investor should put in front of any firm managing their wealth.

  1. Is this an investment advisory account with transparent fees, or a brokerage account where costs may be embedded in commissions, product expenses, or the cost basis?

    SilverOak Investments is an independent investment advisory firm. We make our advisory fee clear and review investment expenses for each portfolio, so clients can fully understand all costs.

    We believe clients should always know exactly what they are paying, instead of searching for hidden costs in commissions, product structures, or legacy holdings.

  2. What is the defined downside range for this portfolio, and how was it calculated?

    We go beyond calling a portfolio conservative, moderate, or aggressive. By analyzing the actual holdings, we estimate a clear 6-month downside and upside range.

    We also stress-test the portfolio to see how it might perform in both tough and positive markets. Our goal is to provide a clear, documented understanding of risk, not just a general label.

  3. What criteria were used to select each ETF, and can you produce the documentation?

    We choose ETFs based on independent research, careful analysis, and clear documentation. We look at many ETFs, focusing on how they perform compared to peers, forward-looking ratings, costs, tax efficiency, diversification, correlation, and how well they fit in the portfolio.

    We believe investors should understand why each investment was chosen, and be able to review the supporting analysis.

  4. If individual stocks are used, where is the documented analysis behind each position?

    When we use individual stocks, especially when coming across large or highly concentrated positions, we ensure there is clear documentation for each decision. Our process may include valuation analysis, dividend history, independent research, price-to-profit comparisons, and technical analysis.

    This gives us an objective way to decide if a stock is undervalued, fairly valued, or expensive, and whether it makes sense to hold, reduce, diversify, or use it for income over time.

  5. How does current market valuation affect portfolio positioning today?

    We believe portfolios should never be managed without careful thought. We look at current valuations, opportunities, risks, fixed income yields, and each client's needs before deciding how to position a portfolio.

    Our approach aims to balance current opportunities with caution, instead of just following recent top performers.

  6. In late 2021 or early 2022, how did your firm respond to duration or interest rate risk with bonds, and can you show me the dated communication?

    Yes. In our January 2022 newsletter, we talked about the risks of low yields, longer maturities, and rising interest rates in fixed income. We explained that to lower interest-rate risk, we might choose shorter maturities and higher-quality bonds like U.S. Treasuries.

    We also pointed out that higher rates could offer better opportunities to buy fixed income at higher yields over time. That newsletter documents how we managed duration risk and fixed income positions to help avoid bond losses.

  7. What does your firm find attractive right now and what do you consider dangerous?

    We do not pretend to know the future, but we believe every firm should explain what they currently find appealing and what they see as risky.

    We generally prefer investments with strong research, fair value, low costs, tax efficiency, and a clear purpose in the portfolio. We are more careful with expensive or crowded market areas, long-duration bonds when rate risk is high, concentrated positions without a plan, and portfolios with high costs, hidden overlap, or poor diversification.

We can answer every one of these questions, and provide documentation.

If your current adviser cannot answer these questions, it is not just a difference in style. It is a risk to you.

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