asset Management
Our Investment Approach As small business owners ourselves, we understand that the money you invest with us has special meaning to you: it represents the fruits of all your labor over a lifetime in your business.Because of this, we’re especially sensitive to being rational in how we invest your money for you. We don’t try to invest to “beat the market,” but rather, we work to maximize your returns and manage your risk by following these guidelines:
- We assess your risk tolerance, and then work to develop a portfolio with the maximum expected return for that level of risk;
- We look at your portfolio as a whole, and use asset allocation and diversification to lower your risk and maximize your returns;
- We avoid investments with hidden loads or fees that reduce investment returns;
- We work to maximize the tax efficiency of your portfolio, increasing your returns;
- We work to find acceptable investments that you can buy and hold, avoiding constant portfolio turnover and the attendant costs that reduce portfolio returns; and
- We keep our own fees, reasonble, so that your money can work for you.
How We Manage Our Client Portfolios We start with a consultative meeting to help us understand your values, relationships, investment resources and goals, your time horizon, and your capacity for and tolerance of risk. Based on this information, we develop an investment policy statement addressing risk tolerance and asset allocation, which will determine how much of your portfolio should be in equities, fixed income and cash. For example, based on your investment policy statement, we might recommend 60% equities and 40% fixed income, or a 60-40 portfolio.
As you might expect, many clients come to us with an established portfolio, and with these clients, we don’t rush to trade in the old portfolio for a new one. Rather, we adjust and change investments over time as necessary to make tax and economic sense.
We design your portfolio using a variety of asset classes to increase your expected return and reduce your portfolio’s volatility. When investment advisors refer to diversified portfolios, they are referring less to the number of funds or stocks in a portfolio, but rather, more about having a number of investments with a low correlation to each other in terms of risk and return. Securities are grouped by similar risk and return characteristics into “asset classes.” A diversified portfolio includes different asset classes that move up and down independent of each other, or have a low correlation, and this reduces the risks of investment.
We incorporate financial, tax and estate planning into your investment picture. We work to maximize both your returns and the tax efficiency of your portfolio. We help you choose the correct investment vehicle for each asset class.
For diversification and better risk/return ratios, we prefer the low cost, broadly diversified funds of Dimensional Fund Advisors (DFA) and Vanguard. For an introduction to DFA and their investment approach, visit their website at www.dfaus.com. For an introduction to Vanguard, visit their website at www.vanguard.com.
We do not have discretionary control over or custody of any client funds; Fidelity Investments serves as our custodian.
Review, Monitor and Adjust We continue to monitor your portfolio, since your life changes everyday, and so do the financial markets. We
- regularly review your investment policy statement to ensure that it accurately reflects your tolerance of and capacity for risk;
- oversee your portfolio investments, and monitor your asset allocation quarterly to ensure that it is consistent with your investment policy;
- provide you with access to web based investment performance reporting software; and
- provide you with quarterly investment reports and relevant financial research.
