ABOUT OUR PHILOSOPHY

There are several core principles that guide our approach to wealth planning and investment management.  The difficulty we run into is that these principles sound similar to almost every other financial planning firm, but how a firm implements them makes a big difference.  We recognize that there are many valid approaches to wealth management and that our views are not necessarily superior to all others.  This is why we are committed to continuous improvement.  Part of the process of choosing an advisor is to make sure the advisor’s viewpoints are in-line with your own. Therefore, any contrasts we point out below are for clarification purposes only and are not given with the intent of saying our way is good and another way is bad.

The Principles

• The objective of wealth planning is to help accomplish your life and financial goals
• Clients always come first
• Your financial objectives should dictate your investment strategy
• Fees and expenses are very important and should be optimized
• A fiduciary standard of care includes on-going research and continuous improvement

Focusing on the Correct Goal

The objective of wealth planning and management is to help you accomplish your life and financial goals with as high a probability as possible.  This may seem obvious in theory, but it is not so obvious in practice.  Low cost investing can be a good tactic, but it’s not the objective.  Beating the stock market may create a good feeling (provided the market is going up), but it is not the objective.  It is easy to get distracted by investment theories and common practices but lose sight of the real objective: meeting your long-term goals. This is why we pay attention to more than just your investment portfolio. For many clients, a cohesive wealth plan allows them to gain control of their wealth and live a life with less financial stress and worry.

Putting Clients First

The claim that “clients come first” often boils down to advisor compensation (fees versus commissions) and disclosure of conflicts of interest.  We don’t accept commissions or any form of revenue-sharing for investment products. We are independent from any particular brokerage firm, so we are under no pressure to recommend any particular investment over another.  And we minimize and disclose conflicts of interest.  However, putting clients first is more than just a set of rules, practices, and disclosures. We want the relationships we have with clients to last for a lifetime and for multiple generations.  It is rare that decisions need to be made that either favor the client or favor us, but when they do, our desire for a long-term relationship drives us to favor the client. With this approach, putting clients first is actually aligning our long-term interests in the same direction.

Objectives Drive Investment Strategy

It is often the case that an investor’s perceived risk tolerance and portfolio risk are higher than the amount of risk they need to take to be successful.  We believe this stems from two assumptions; 1) taking more risk leads to higher returns, and 2) the goal of investing is to maximize returns. When it comes to investing, higher risk does not always result in higher returns over time, but it always means a higher probability of loss.  By definition, when investors take investment risk they choose to accept a higher probability of loss for the potential of a higher return.  Our process involves determining what your investment return requirements are, and then striving to meet or beat those requirements with high probability.  This means not taking more risk than needed for your plan to be successful, and working with you to make sure your objectives are realistic and feasible.  In other words, allowing your requirements to drive the strategy, not the other way around.

Expense Optimization

There are two main schools of thought when it comes to investment expenses. One view is that investment expenses are the most important factor when it comes to investing, which logically leads to expense minimization.  Another view, which we hold, is that investment diversification and risk management have value, and therefore expenses should be optimized.  For some investment types, U.S. large cap stocks for example, there is little to no benefit in attempting to beat a relative index and, therefore, no real reason to waste expenses. For other non-correlated investment types or risk management strategies, such as energy infrastructure, private debt, or managed futures, it may be well-worth incurring a higher expense if it increases the odds of meeting financial goals.  Therefore, we strive to utilize investment expenses wisely and strategically.

Continuous Improvement

We believe that continuous improvement, on-going investment study and evaluation, and general curiosity are all part of a fiduciary standard of care.  We may never arrive at the perfect formula for wealth management and investing, but we will continue to incrementally improve the one we follow.  This requires a balance between an open mind, a healthy skepticism, and a critical approach when it comes to new ideas.  It also means more work, but fortunately we love what we do.