Portfolio and investment management doesn’t need to be complicated. In fact, the simpler the approach, the more effective it can be. After we’ve worked through the first phase of financial planning with a client, we move to developing and executing an investment strategy on their behalf.
Our approach can be broken into five steps:
Really, this means assessing what point you will lose sleep if your portfolio loses value. We used to call this step “Risk Tolerance Analysis”, but nobody knew what it meant. Our goal in this step is to take what we learned from our planning sessions and apply it to your portfolio. Ultimately, we are trying to find the delicate balance between your willingness and ability to take on risk in your portfolio:
Ultimately, we want to build a portfolio that lets you sleep well at night. Here, we take what we’ve learned in the first step and build a portfolio allocation to fit it. Our desire is to invest your money in a way that makes it work for you, while also ensuring you don’t hit the big red “PANIC” button when the market gets squirrely.
Our core portfolio allocation focuses on finding the best mix of fee-efficient and tax-efficient index-based investment funds. When possible, we layer in alternative investments (non-public investments) to provide additional return potential that isn’t directly tied to the volatility that can affect the publicly-traded investments in the core portfolio.
Being headquartered in Seattle, our company has a natural tendency to consider socially responsible investing. Where appropriate, our investment management process incorporates environmental, social and governance factors into our portfolios. Also known as ESG investing, this allows us to screen out some investments that negatively impact things like climate change, labor standards, health standards and other factors that affect our global community.
Cost basis, transactions costs, and liquidity all factor into our trading and investment approach. Our goal is to reduce the tax burden and investing expenses in your portfolio (transaction fees) so that more of the return hits your bottom line. In addition, we consider different approaches on when to divest significant positions that may have a low-cost basis, or how to invest significant cash balances that you want to layer into the market over time.
After we’ve invested your money, we don’t ignore it. In fact, we continuously monitor the positions and the portfolio to ensure they are performing as expected over time. In addition, our investment management process ensures we rebalance the portfolio periodically. This helps make sure your portfolio stays aligned with your initial portfolio allocation. If it doesn’t, unintended volatility can creep in over time, creating unexpected surprises.
We actively work on ways to pay Uncle Sam less. In industry speak, this is called “tax-loss harvesting”. It really means we want to find ways to offset your gains by capitalizing on losses, so that you pay less in taxes. Some investments perform great over certain periods, some will falter. If we can use the losses to help offset taxable gains, we’ll do it all day long.
After completing the first two phases, you will experience our comprehensive approach to wealth management, including introductions to other professionals, access to leading-edge online portals and consistent communication to help you meet all of your financial needs.
