Wealth Management

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Every solid financial plan depends on one key component: having the necessary funds to meet one’s objectives.

For most people, that means accumulating wealth over a number of years through an investment portfolio based on goals, tolerance for risk, and other fundamentals.

Access to Independent Research
Whether you are investing for retirement, college, or any other objective, we will create a customized portfolio to fit your personal financial situation. As we do so, we often rely on our access to state-of-the-art, independent research reports that help us evaluate current and future portfolio positions.

Read more about our research capabilities.

Because these research firms are not broker/dealers and do not underwrite initial public offerings, you can feel confident that their analysis is not driven by any hidden agenda.

Setting Expectations
One of the most important aspects of selecting investments is setting expectations. Although this sounds simple, it is a step that is commonly ignored by those managing their own money and is often neglected even by some investment professionals.

Before recommending and buying an investment, we work with you to establish goals and anticipate performance. This enables us to lay the groundwork for a buy-and-sell discipline designed to guard against dramatic consequences to your portfolio.

The Basics of Asset Allocation
Asset allocation is the process of dividing your investment dollars among a variety of complementary asset classes, such as stocks, bonds, real estate, and short-term, highly liquid vehicles—including money market funds—so that your portfolio is well diversified.

Key benefits of a sound asset allocation strategy include reduced risk, more consistent returns, and a greater focus on long-term goals. In fact, proponents of asset allocation say that this practice is designed to achieve higher risk-adjusted returns over time.

Some Facts About Asset Allocation
Asset allocation is a critical element in any sound investment plan. By building a portfolio that encompasses a wide selection of securities and a broad range of asset classes and investment styles, you can help protect your portfolio from sudden changes in the financial markets. A diversified solution can potentially help you attain your long-term goals more readily—and with additional peace of mind.

There can be no guarantee that any particular yield or return will be achieved from any investment, nor is there a guarantee that a diversified portfolio will outperform a nondiversified portfolio. Investors should note that diversification does not assure against market loss.

A change in your goals, time horizon, risk tolerance, or personal financial situation may require a change in your strategic asset allocation, which is why it’s important to periodically review your asset allocation strategy. For example, as your time horizon shortens, you may have less time to recoup losses from sudden market downturns. Therefore, you might consider a more conservative asset mix.

In contrast, investors whose financial situation has improved significantly or who have become more comfortable and experienced with more volatile assets, such as stocks, might shift to a more aggressive allocation strategy.

Fluctuations in the financial markets may also necessitate a reassessment of your portfolio. For example, if you begin an investment program with 75 percent of your money in stocks, 20 percent in bonds, and 5 percent in cash/cash equivalents, several years of strong bond market performance (as was the case from 2000 to 2003) could quickly shift your allocations. The resulting, unplanned overexposure—or in negative conditions, underexposure—to an asset class may not be in keeping with your risk tolerance, investment goals, and time horizon.

That’s why we encourage an ongoing dialogue with us to establish and periodically rebalance your portfolio. In this way, we can help ensure that your investment plan remains consistent with your long-term goals.

Review our Periodic Table of Asset Classes

Strategic Vs. Tactical Asset Allocation
Strategic allocation refers to the development of a portfolio that reflects a client’s long-term investment risk-and-return profile. Basically, we develop an asset allocation strategy that we do not expect to vary as years go by.

Although we recognize that a client’s financial circumstances may require us to shift the allocation from time to time, the initial intent of this approach is for the allocation to remain stable for at least five years. And we would expect to rebalance the portfolio periodically to maintain the determined distribution.

Tactical allocation refers to the active management of a portfolio, where we might change the asset allocation at frequent intervals in hopes of enhancing returns.

It’s important to note that strategic and tactical asset allocation are not opposing mechanisms. Rather, they are tools that can operate in tandem.

Consider the analogy of a ship at sea. Upon departure, a clear course is charted. But if the course could be modified so as to encounter favorable winds or to avoid a storm, the ship would follow a slightly different path. Similarly, we establish a fixed allocation with a destination in mind, but we may build into the plan enough flexibility to seize opportunities along the way.

Ibbotson Associates
Ibbotson Associates, Inc., is recognized as a leader of asset allocation research in the financial services industry. Its business lines include investment consulting and research, planning and analysis software, wealth forecasting, and educational services.

It fills an important need in the finance and investment industry for an independent, single-source provider of investment knowledge, practical application expertise, and leading-edge technology. For more than 30 years, Ibbotson has successfully worked to incorporate academic theory into practical, useful investment products and services.

Through a consulting arrangement with our broker/dealer, Commonwealth Financial Network®, Ibbotson has developed five model portfolios with various investment objectives to cover the spectrum of client needs.

Emotions of Investing
Logic and emotion have never been a perfect pairing. It is logical for investors to stay focused on their long-term goals during volatile markets, but emotionally it is very difficult to follow this reasoning.

The chart below attempts to characterize the emotions of investors as market performance varies. This hypothetical scenario is for illustrative purposes only and does not reflect actual market performance, nor is it a prediction of future market conditions.

Review our Emotions of Investing chart.