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Asset Allocation — Balancing risk and reward to meet your goals

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Asset allocation is an investment strategy that aims to balance risk and reward.

It does this by considering your time horizon and risk tolerance and apportioning a portfolio's assets to specific classes of assets in order to meet financial planning goals, objectives and needs.

By creating asset allocations designed to each investor's needs, we don't fit investors into a catch-all allocations that could be inappropriate for them.

Instead, we start from the basis that every investor is unique and different, so their investment portfolios should reflect this.

  • Strategic Asset Allocation: A long range plan for a portfolio that takes into consideration overall long-term goals, objectives and needs.

    We typically only make alterations to the strategic allocation as circumstances evolve, time horizons change and goals, objectives and needs change.

  • Tactical Asset Allocation: In contrast to strategic allocation, tactical asset allocation attempts to capitalize on changing market conditions.

    The overall asset allocation will be changed frequently in the short term, but the overall strategic asset allocation isn't abandoned from a longer term perspective.

    For investors looking to take advantage of specific market conditions, we construct portfolios that can accomodate these situations through over-weighting or under-weighting specific securities in the portfolios.

    The goal is to capitalize on short term trends and generate extra return or limit shorter term loss.

    We do this by creating a globally diversified portfolio using equities, fixed income, alternative assets (such as REITs and Commodities), cash and cash equivalents.

    We rebalance as a portfolio deviates away from the asset allocations and employ other techniques like dollar cost averaging and asset location to enhance overall portfolio performance.


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Things We Consider

90% of investment results happen because of correct asset allocation.1

The aim of asset allocation in the first place though is to balance risk and reward. In looking at how to best allocate your assets, we factor in your timelines, goals, and needs, and apportion your portfolio's assets accordingly.

And, it's customized for each client.

1 Research supports this claim. We don't just make this stuff up.

The old saying, "It isn't what you make, it's what you keep," is the core of an effective wealth management plan. Since taxes are inevitable, after tax returns are crucial to achieving wealth planning goals.

Asset location refers to how an investor distributes their investments over taxable accounts like Trust brokerage accounts, tax-deferred accounts such as IRAs and 401Ks, and tax-exempt accounts such as Roth IRAs and Roth 401Ks.

And, using asset location planning correctly can increase how much money is kept and not paid out in taxes.

Often also referred to as marketability, liquidity is the ability to turn an asset/investment into cash quickly.

For example, investments in ETFs, most company stocks, and bonds that trade on national exchanges have high liquidity; real estate on the other hand takes longer to convert to cash.

We strive to understand our clients liquidity needs so there's access to cash as needed.

Periodically, portfolios drift away from goals as the value of investments within the portfolio change.

Rebalancing brings a portfolio back into line with your goals and helps reduce risk.

Under-weighted securities can be purchased with newly saved money; alternatively, over-weighted securities can be sold to purchase under-weighted securities.

Our goals are to maximize returns and minimize taxes.

To help achieve these things, we look to do things like: sell tax efficient assets first, use Exchange Traded Funds (ETFs) with low portfolio turnover, and buy investments with the biggest tax advantages.

Since every investor has different needs from fixed income to access to capital, we factor all this into your portfolio construction.

ETFs (Exchange Traded Funds) offer clients a way to build a tax efficient asset allocation that's diversified, low cost, low conflict of interest, tactically tradeable, and highly liquid.

Building a core asset allocation using ETFs can provide exposure to all the necessary portfolio constituents with low minimums. We use ETFs to generate core portfolios that strategically expose our clients to investments that meet their risk tolerance and investment goals.

Using ETFs (Exchange Traded Funds) significantly reduces portfolio conflicts of interest.

One of the more difficult things that happens when using Mutual Funds and Separately Managed Accounts is that portfolio managers may all be investing in the same investments for a number of reasons.

For instance a Value manager may be buying a stock that your current growth manager is selling. Often Mutual Fund Managers and Separate Accounts Managers suffer from style drift. This is where fund managers invest money outside of their mandated portfolio model, often to boost poor performance. Unfortunately, this can unintentionally raise the risks of--and to--a portfolio.

ETFs offer high transparency and often have low turn-over of positions that make up the fund. This helps eliminate conflicts of interest and allows us to look at making better choices for you.

"Don't put all your eggs in one basket," is one way of thinking of global diversification.

True diversification means to reduce risk by investing in a variety of assets that have low correlation of return to one another.

Diversification can be achieved many ways within asset classes, amongst asset classes, by sector, by size, by industry, and so on. The idea: don't expose all your money to the risk of a single investment.