While important, the construction of the portfolio is not the most important aspect of a successful investment plan. The investment portfolio may be perfectly selected, but the investor's emotional behavior can still prevent it from working. Unfortunately, over the course of their investing lives, many people lose the perspective and confidence necessary to stick to a plan. They can begin to make emotional mistakes that sabotage the inevitable success that would have occurred. The decisions made are understandable, but they are often disconnected from the very goals the investors are trying to achieve. Their behaviors often prove to be the problem and not the solution. Helping manage investment-related behavioral tendencies may be the biggest value we bring to our clients.
The individual investor is subject to an incredible amount of noise from the media, family, and friends; everyone has an opinion about what should be done to achieve a successful investment result. In our view, the correct analysis of any investment strategy can only be done in the context of how well the investments work to accomplish the real financial goals that have been established in the financial plan.
We work to establish a plan with our clients to help select the appropriate portfolio of investment strategies designed to give the highest probability of reaching their financial goals with the lowest possible assumption of risk. In the construction of our client portfolios, we use stocks, bonds, and real estate, as well as alternative investments that can be less correlated to traditional assets.
We allocate these broad asset classes based on our clients’ goals, and we use various investment products to gain exposure to the individual components of each asset class. In some cases, we use third-party fund managers to attempt to add value through their selection of individual securities. These managers might look for undervalued companies or attractively priced bonds. We manage the managers, many of whom we have met in person. We also utilize passive investment strategies, which attempt to capture market returns, but with lower expenses. In all cases, we are building custom portfolios for our clients, based on their families, their goals, their emotions, and their tax situations.