Investment Strategy

Our Investment Strategy places an emphasis on proper "asset allocation".  Although the term may sound complicated, asset allocation simply means dividing up your investments in a way that makes sense for you.  It's the process of dividing up your investment dollars into categories that generally behave differently in market cycles.  We structure an asset allocation strategy that matches your unique financial needs, comfort with investment risk, and the time frame for when you're planning to retire.  We use the information from our Wealth Analyzer to pinpoint what your asset allocation should be.  

Asset Allocation, Security Selection and Market Timing are the three areas a typical Investment Advisor balances their time and energy on.  They all have an impact on the performance of an investment portfolio.  However, many Advisors spend a majority of their time on security selection and market timing.  They usually tout a sophisticated security selection process, or market timing strategy.  Some claim to be experts on both market timing and security selection via "technical analysis".  Which means they invest your investment dollars after analyzing graphs and charts, with little regard to the underlying investment. 

The independent research firm of Ibbotson Associates (a subsidiary of Morningstar) conducted a research study on the importance of these three major determinants of portfolio performance.  The results sent shockwaves throughout the financial community.  And many Investment Advisors just turned the other cheek to help justify their existence.  The results show the importance of the three major determinants of portfolio performance as follows:

 91.5%  Asset Allocation
     6.7%  Security Selection
 1.7%  Market Timing

The results of this in depth study show clearly just how important proper "asset allocation" is when managing investment portfolios.  Yet most Financial Advisors spend little or no time pinpointing their client's optimum asset allocation.  The above study proved that 92% of a money manager's performance, for better or worse, can be explained by their selection of asset classes, not by their selection of individual stocks or market timing.  Asset allocation is the clear winner over time!

It should come as no surprise we don't waste our time and energy on selecting individual stocks or market timing.  We spend a large amount of time saved helping clients with all other areas of their Financial Plan.  And we keep close watch on any changes by reviewing their Wealth Analyzer at least twice a year.

After we determine what a client's proper asset allocation is, we manage their investment portfolios using market indexes called Exchange Traded Funds (ETF's).  These are relatively new investment instruments on Wall Street, yet they are very powerful tools for implementing proper asset allocation.  To read more details about what ETF's are, and the advantages they provide our clients, please click here.