For the past few weeks, we have been reviewing the components that go into the way we bring value to our client relationships. This week, the role of Portfolio Management takes center stage.

Your specific goals create the frame for how we approach managing individual portfolios. While goals are the driving force, decades of academic research form the core of our actual portfolio management approach. This scientific evidence tells us there are a handful of specific risk dimensions that determine investment returns. We focus on balancing these dimensions in order to tilt the investing odds in your favor.

We don’t believe that attempting to “outguess” the market is an effective long-term strategy. Trying to make predictions about the future direction of markets and pick the winners is speculation, not investing. Instead, we believe that you are better served by accepting that current market prices are fair. Under this portfolio management approach, diversification is increased, while trading and commensurate costs decrease.

Additionally, since investments are made for some purpose in the future, we manage your cash and liquidity needs and build that into the portfolio. This allows for important interim goals to be funded along the way towards your larger, longer-term objectives.

Ultimately, our main value within the portfolio management component is to combine a structure based on market evidence with long-term discipline. To be a successful investor, you need to act on your financial plan, not react to the “deathtrap” of current events and random market noise.

We estimate that about 15% of the total value we create for you is attributable to our Portfolio Management system. Next week we will wrap up this four-part series with a discussion of how re-balancing adds value to your investment portfolio. Ready for a real conversation?

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