Investment Process
- Our Approach – We combine qualitative measures (talking to and understand our client’s goal, objectives, and risk tolerance) with the quantitative principles (modern portfolio theory and risk based asset allocation) of investment management to help our clients produce outcomes that meet expectations.
- We have developed a proprietary process based in behavioral finance to help us understanding our clients risk tolerance, time horizon, and investment objectives. Once these qualitative factors have been assessed the investment process becomes much more deliberate and an asset allocation plan can be developed.
- Time Horizon – Through an interactive exchange we help to quantify a client or organization’s time horizon. For some clients such as endowments, foundations or trust funds there is no specific time horizon as there is no specific end date for the fund. For individuals, their time horizon may be range bound by a specific retirement date. When someone retires, they typically transition from the accumulation stage (saving money) to a distribution stage (spending retirement dollars).
- Investment Objectives – Understanding a client’s goal for investable assets over a lifetime is the key to developing attainable investment objectives. These objectives will be heavily influenced by personal preferences and desired spending levels, both for individuals and institutions, and should be in alignment with a client's risk tolerance.
- Risk Tolerance - Risk tolerance is dependent on many factors but is often strongly influenced by personal preferences. A client may have a bias that drives them toward an asset allocation strategy with either a high or low risk tolerance, or anywhere in between. Regardless of a client’s investment objectives, integrating risk tolerance into the financial planning process will have a large impact on asset allocation strategies.
- The difference – Effectively developing an asset allocation strategy that is consistent with a clients risk tolerance will be a major predictor of investment returns. We also focus on employing investment vehicles that are low cost. These two factors, when intelligently combined, have a very large impact on an investor’s total return.