Philosophy

We wanted to devote a full page of this site to "philosophies" because we think it is important that you understand our beliefs about 1) client relationships and 2) our style of investing. It is our hope that after you read these two sections you will better understand what to expect from us as financial advisors. Hopefully, these things will mesh with your own beliefs and we can develop a very solid relationship.

Client / Advisor Relationship Philosophy

Personal finance, by nature, is a very touchy subject for lots of people. We all have deep engrained feelings about what money or the lack thereof means to us. It can mean power, security, charity, fear, hope, or love. What it means to you is a result of all of your past experiences with money.

We wanted to touch on that subject a bit to kind of reinforce the fact that money plays a very important role in our lives and it can have a dramatic effect on every area of our well being. Because we have emotional issues surrounding money it can often times be easy to push it aside and say, "I am not going to deal with it." Well, we think we could all relieve a little stress in our lives by having an advisor who can put a plan in place that will both provide you with peace of mind now and grow with you into the future.

So who will that advisor be? Well, by now you have probably noticed how just about everyone calls themselves financial planners or advisors. Your insurance agent might say he is a financial planner because he collects financial info from you in order to sell you your policies. Your mortage broker might say he is a financial advisor because he gets you into a home loan. Even stock BROKERS, who are by nature "selling" and do not have a fiduciary duty to give objective advice to you, call themselves financial planners.

Our own personal belief is that you should choose someone who is going to provide you with objective advice that is tailored to your own individual situation. This advice must not be tied to any commission based product sales. This person should be someone you trust and someone with whom you view yourself building a long term relationship.

Your financial situation will undoubtedly change with the transitions of your life. In our opinion a true financial planner will want to be there with you to help deal with those transitions and make financial decisions accordingly. This is why we call ourselves "Financial Life Advisors". We intend to be there with you every step of the way, managing and growing your finances, and being there to provide the necessary support when times are tough.

Our ideal client then is someone with whom we can develop a bond that includes mutual trust, respect, and integrity. We are not here to simply help you put a plan in place. We are here to help you be even more successful than you already are and we will use whatever resources are at our disposal to accomplish that.

Investment Philosophy

Some of what we are about to say may be a rehash of things already discussed on our investment management page but we feel it is important to talk about nonetheless.

Nothing that we are about to say should be taken as a slam against any other financial advisors or their techniques. We're sure that there are as many positive business models as there are people out there. We just want you to understand what our philosophy is and how it is a bit different than what you may encounter elsewhere.

As financial advisors who are paid primarily on an assets under management basis, we have a vested interest in how your portfolio performs. If it increases in value then it is a win/win situation. If its value decreases then we both lose. Most financial planners who manage your money on an assets under management approach tend to use a very passive strategy towards managing your portfolio. Most of them simply choose a diversified group of perhaps 10-15 mutual funds, maybe a few ETFs, and some individual stocks if your account is large enough. This strategy is done on a buy and hold basis where very little selling is ever done, except perhaps to rebalance your asset allocation.

There are few things we would like to point out that make this strategy less than efficient in our opinion. The first is that mutual fund fees can be very steep, 0.5 to 1.5% in most cases. These fees, in addition to your financial advisor's fees can really be a drag on your portfolio. Quite frankly, we have never really understood why someone who calls themselves an "investment manager" would use such a heavy dose of mutual funds. After all, they are just deferring the management of the assets to someone else and you are being charged double the fees.

It is our belief that you are paying US to do the investment management and not the mutual fund managers. We can build you a portfolio of low costs ETFs, and individual stocks that will be properly diversified AND allocated to the asset classes we decide upon in your investment policy statement, without using expensive mutual funds. We view portfolio management as our number one priority and actively seek out the best knowledge and strategies we can find. We do not defer these decisions to someone else. You are paying us to make them and we make them! Think of this as having a "separately managed account" by your financial advisor and not by paying someone else extra fees for it.

The final point that we want to make concerning investments is the passive/active decision. It's certainly true that "the market" has gone up 70% of the time and averaged 10.5% return per year and so on. You've heard the buy-and-hold speech and you have heard all the data to support it. The bottom line here is that most of the arguments in favor of buy-and-hold assume very long holding periods, and investors who have no fear. You could leave your money in the markets for long periods of time but could you stomach 30-60% drawdown periods? Most investors cannot, they withdraw money when the market is going down and only put money back to work again when it starts to go back up. In essence their return is always less than the market because their emotions force them in and out at the wrong times.

We believe in purchasing long term positions in assets that will grow over time but we also believe that there are times when market fundamentals dictate that one should get defensive and preserve their capital. Getting more conservative during such times is not "trading", it's merely protecting your assets. Our strategy is an active one but it does not involve trading in and out of markets. It simply involves hedging and risk reduction when the fundamentals dictate. Nothing too fancy, just trying to save your money!

A lot of these investment topics and ideas need much further explanation and discussion and we will be getting to those things in more detail in the future. As usual, the best thing you can do is speak to us and ask all the questions you want to hear our reasoning and make yourself comfortable with our positions. After having read more than 200 financial books and having been trained in portfolio management in graduate school, we can assure you that we probably have an opinion about just about any topic you've heard!!!