Investment Summary
Implementing Your Financial Plan: Creating a Client-Centric Portfolio
- Begin by understanding your clients' financial goals and aspirations.
- Remember, there's no one-size-fits-all "perfect portfolio." The key is to design a portfolio that clients comprehend and feel at ease with.
- While we emphasize the importance of long-term investing, short-term experiences can influence clients due to the non-linear nature of portfolio returns.
- Ultimately, it's our clients' emotions and objectives that guide the level of risk in their portfolio at any given time.
Portfolio Construction Approach
- To align portfolios with our clients' financial objectives, we first analyze the role of each component.
- We divide the portfolio into "levers" for achieving desired outcomes:
- Return Enhancers: Strategies with higher volatility seeking long-term returns.
- Risk Reducers: Strategies designed to offset or mitigate return enhancers' volatility.
- Embracing the Active vs. Passive debate, we utilize both approaches, considering their pros and cons for diversification and risk management.
- We prioritize continuous education and innovation, regularly evaluating new strategies and tools to enhance our process.
- Ensuring our clients understand their portfolios is a vital part of our mission.
After-Tax Considerations
- While we tailor portfolios to our clients' goals, we also emphasize what they ultimately retain.
- We prioritize underlying strategy expenses, but taxes can have a more significant impact on portfolio success.
- "Asset Location" is a critical focus, optimizing tax efficiency based on diverse client account registrations.
- Rebalancing goes beyond allocation adjustments; we see it as an opportunity for tax-loss harvesting to reduce the tax impact on portfolios.
- Strategy optimization involves choosing the right investment vehicle (e.g., stocks, bonds, mutual funds, ETFs, and Separately Managed Accounts) to enhance portfolio management, reduce costs, and optimize tax implications.