…Continued.

Our approach to portfolio management for each client starts with ensuring we understand why and how our portfolio management services will benefit that client in particular. Next, of course, we will need to understand our client’s risk tolerance (and their partner’s risk tolerance), tax liabilities, their current portfolio, their other assets, and the stability of their income (or need for income from the portfolio). We will also create a personalized Investment Policy Statement for each client (and/or client’s partner). This will require several in-depth discussions with the client to start out as well as periodic check-ins to make sure we are aware of any changes. For example, significant changes like receiving bequests or inheritances, purchasing houses (though ideally we would be discussing the house purchase before it occurred!), receiving significant bonuses or option/stock grants, or job changes might be relevant to how we manage and/or structure your portfolio.

When we manage a client’s portfolio, we still aim to keep it as simple as possible. We believe this is optimal for a several reasons, but one of the biggest reasons is that we want our clients to be able to understand what they own and why (if they are so inclined or become more interested in time). Overly complex portfolios, moreover, do not necessarily lead to “better” performance (diversification, in fact, should reduce performance if measured against any particular benchmark over a short time frame, but theoretically, at least, it will improve total portfolio performance over a longer time frame). Although we certainly would hope to never lose you as a client, overly complex portfolios often cause significant tax issues if you do decide to change advisors (a cost that is typically hidden from the outset). Accordingly, we typically use broad market or index ETFs (exchange traded funds) or mutual funds as the foundation of a client’s portfolio, along with individual stock and bonds (in certain instances), but in all cases prioritizing low fees, tax efficiency and flexibility. Although we do not believe that one-size-fits-all, it is also true that (almost) no one benefits from extensively individualized custom models - and those custom algorithms and models are often more expensive (sometimes significantly so). Finally, we are cautious and want to ensure our clients avoid mistakes. Our clients are going to be wealthy primarily because of their earnings, their saving rates, their simple but consistent approach to investments (and avoiding bad luck). Good luck, like their employers’ stock performance, for example, will certainly help, but ideally our clients don’t need it (or any more of it!). In other words, our clients are going to be wealthy because they are investing, not because of what they are invested in (unless , of course, the client was all in on NVIDIA 20 years ago.) Or, really, even just 10 years ago!

Inherent in our portfolio management services are a number of meetings, conversations, emails, etc. throughout the year to discuss the changes in your financial situation, as well possible adjustments to your risk tolerance, your liquidity needs, and…yes…the portfolio’s performance. There is no charge for these included services, and we would aim to have no fewer than 3 annual meetings (and potentially more, depending on the year - as noted above, the first year may have more). We will also attempt to make ourselves available (within reason) for meetings and/or calls with your CPA or trusts & estates attorney or other specialist you decide to engage.

In general, as part of our portfolio management, we will present updates and discuss your financial situation and any potential changes that might be coming (or that might be recommended). We will not present new detailed financial plans or specific analyses (though we will update previously created analyses) unless previously discussed. For example, a comparative analysis of various bond ladders as you approach retirement or a sensitivity analysis of your portfolio to a variety of shocks) would not be included. Detailed, written work product and specific analyses such as these will require additional hourly fee financial planning work. Please note that our hourly fee rates for clients who use our portfolio management services are steeply discounted (until they become complimentary) as your portfolio size increases.
See the Discounts page for more.