Our Investment Approach

Our Investment Approach

Our investment philosophy is rooted in the belief that equity markets offer much needed long-term growth but are more volatile than many investors perceive. Multiple studies have shown that individual investors significantly underperform the mutual funds that they own in their portfolios for the simple reason of not staying invested when the markets inevitably go through bear market declines.  We believe that our job is to help our clients remain confidently invested through market cycles to take advantage of long-term equity market returns.  We have a multifaceted approach to help our clients stay invested for the long term.  By educating our clients and understanding our client’s risk tolerance and financial goals we can properly design investment allocations suited to specific time horizons, goals, and needs.

We understand that withdrawing retirement income or making emergency withdrawals from a portfolio when its value has significantly declined can harm a client’s real returns. Studies indicate that the risk of substantial investment portfolio declines in the early stages of retirement can greatly impact the success or failure of traditional retirement income plans. Consequently, we believe that the conventional approach of investing in a diversified portfolio of stocks and bonds and withdrawing 4%-5% annually is an imperfect retirement income model that requires new planning techniques. Without a proven solution to this problem, retirees may not enjoy their retirement to the fullest due to the fear that another significant market decline will disrupt their original plans. Read on to learn more about what we consider to be the most significant mistake that most retirees make and our proven solution to mitigate this very real risk.

Watch the video below to better understand the importance
of correctly aligning your investments with your true risk tolerance.

Find your personal risk number and better understand if your investments are correctly aligned.  Click the button below for a free portfolio risk analysis:

Our Core Beliefs

Utilizing asset allocations for each client by first determining the client’s true risk tolerance and return objectives is paramount, as it greatly impacts investment outcomes.  Multiple studies have shown that roughly 90% of portfolio performance can be explained by asset allocation and a disciplined adherence to that plan.  Conversely, only 10% of portfolio returns is explained by security selection.

With properly assigned risk targets, we strive to optimize portfolio diversification to reduce individual security and manager risk and create more efficient portfolios.

While we don’t believe that tax should be the only factor in asset allocation decisions, taxes can create a significant drag on the performance of a portfolio.  Therefore, we are very mindful in our investment allocation decisions.

Identifying disciplined active managers with superior long-term performance and low costs can add significant value long term.  While we believe that effective active managers will provide the most value long term, we believe that both passive and active managers can provide value to a client’s allocation.  We have a disciplined methodology to evaluate and select both active and passive strategies.

The Problem:

Withdrawal Risk

Withdrawal Risk is a widely known and thoroughly researched concern that is seldom discussed. Our belief is that the reason this matter is not addressed is that the investment industry is constructed around conventional retirement income models that are simpler to execute and maintain. The problem with these traditional models is that diversified portfolios with specified annual withdrawal rates do not adequately address this actual risk. An example of two similar investors retiring in different decades with nearly identical long-term returns but extremely different retirement outcomes is illustrated to the right.

While we are optimistic about the long-term future returns of the stock market, we don’t have a crystal ball that will tell us if the next 10 years will be a like Mr. Happy’s.  Unless you do, we believe you need a solution to help you address this very real risk to your retirement income plan.

The Solution: The Bucket Plan

The Bucket Plan® is a three-bucket approach to segmenting your money based on the purpose and time horizon. Essentially, to reduce your sequence of returns risk we need to secure your income source for the next 5 to 10 years.  By reducing the volatility of your income source, we are then able to invest the remaining assets for long-term growth to ensure that you can reduce your inflation risk.  Watch the Video to the left to better understand how The Bucket Plan strategy can help you invest confidently by mitigating sequence of returns risk:

While the bucket plan video addresses those who are approaching or currently in retirement, it can also effectively help any client that may have a near or medium-term liquidity need.  Contact us to see how we can help you confidently invest for both today and the future and create your own customized plan.

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