Broker Check


Understanding Markets

Once we have a clear understanding of our clients' long-term goals and their prior approach to achieving those goals, we can begin the process of learning and using the evidence of how financial markets have rewarded wealth over time and the risks inherent in markets that we must chose to embrace or avoid.


No Two Clients Are the Same

In some cases this process results in a confirmation of previous decisions our clients have made requiring only minor refinements. In others, a complete retooling of our clients' knowledge base, belief system and implementation framework is necessary. In either case, we look to improve the odds that our clients are able to achieve their long-term goals.


Speculation Masquerading as Investment

We have extensively reviewed (and look forward to sharing with our clients) the evidence on "traditional" investment approaches—trying to select individual securities that will “beat the market” or moving in and out (“timing”) of markets to capture gains and mitigate losses. Contrary to what most believe, we find that that trying to "outperform" through selection and timing is not consistently successful. We don’t even consider it investing, we believe it is more akin to speculation. More specifically, it has been shown to result in lower long-term results, a higher amount of wealth lost to taxes, and a much greater degree of financial anxiety; outcomes that no reasonable investor would accept if they knew there was an alternative.


Asset-Class Investing and the Fama/French “3-Factor Model”

That alternative is a process called “asset-class investing." It is an approach we have embraced and implemented on behalf of our clients consistently since our inception. Asset-class investing is based on Nobel Prize-winning academic research into the long-term risk and reward behaviors present in financial markets. Specifically, we find that 3 primary decisions, or “factors," impact a diversified-portfolio’s results:


  1. The amount dedicated to stocks vs. bonds
  2. The amount invested in large stocks vs. small stocks
  3. The amount allocated to “growth” stocks compared to “value” stocks

The long-term evidence in almost every geographic region where we have credible data confirms that the higher risk of stocks (relative to bonds), small stocks (relative to large stocks) and low-priced value stocks (relative to high-priced growth stocks) should lead to higher overall returns.


The Importance of Diversification

What's more, “stock/bond," "small cap," and "value" factors in the market behave very differently over time: sometimes stocks are doing relatively well but small cap and/or value stocks are performing poorly, and vice versa. So a portfolio that is structured to capture the primary investment factors and is further diversified globally should result in a higher-than-market return without commensurately-higher risk thanks to the additional diversification benefits.


Getting Our Hands Dirty

Our process doesn’t end at the theoretical level. We also take the time to review the historical behavior of various individual and portfolio-level asset class combinations with clients to build realistic expectations for future results—a crucial input to financial success. We then decide on an overall allocation that is well suited to accomplish our clients’ long-term goals without a level of short-term volatility and loss that may, despite our best consulting efforts, simply be too much to bear.


Incorporating Additional Financial Goals

Further considerations are made and reviewed with our clients concerning the relative tax efficiency of our portfolio decisions—employing "tax-managed" investment vehicles where appropriate, as well as the most efficient way to generate an ongoing income stream and efficiently transfer wealth.


Once our asset-class principles have been thoroughly reviewed and understood and an investment portfolio decided on and implemented, the difficult work begins.