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Steps in the Investment Process

Below are the steps in my investment process, but the real meat is here:


  • First, I work with the client to determine financial objectives and constraints or risk tolerance.

    Depending on the situation, determining the client’s financial objectives may involve the development of a financial plan that takes into account the client’s financial resources and expected expenditures, such as second homes, college education and retirement.  A sample plan may be found here.


  • The next step is the determination of the client’s risk tolerance.  Rather than using a standardized questionnaire as many firms do (or an automated one as used by robo-advisors), I sit with the client, including spouses/partners, to discuss tolerance for portfolio volatility in the context of income and resource availability and expected expenditures. 


  • Once an understanding of the client’s risk tolerance and financial needs has been established, we jointly develop a benchmark against which my performance will be measured and displayed on a monthly basis.  Typically, this benchmark is a combination of investable equity and bond ETFs, but may also reflect a minimum required rate of return.  It is my goal to outperform the benchmark over a rolling period of 2-3 years, after fees.  Providing and displaying a benchmark for the performance of the total portfolio is a distinguishing difference in my approach.


  • Next, I review the current and my best estimate of the macroeconomic outlook over the investment horizon.  Often my clients are still engaged with the business world and have their own access to economic conditions and outlook.  These views are welcomed and are taken into account.


  • Using the economic outlook and the client’s risk tolerance, I then establish an asset allocation strategy, both short term and long term, in terms of 5-10 major asset categories, including domestic and international equities for developed and emerging markets, real estate, commodities, and so-called fixed income.


  • The long term, or strategic, allocation reflects the basis for the investable benchmark we will use to measure my performance.  The short term, or tactical, allocation is the current allocation chosen to reflect the current economic and market outlook.


  • Once the initial tactical allocation is implemented, I manage the portfolio on a regular basis by realigning the allocation based on developing market conditions and changes in the relative performance of the component securities.  There are significant differences in the way I manage portfolios that I encourage readers and potential clients to examine.  For more information on the investment management process, please click "Learn More" below.


  • I measure my performance and evaluate it against the performance benchmark in communication to clients along with a summary of recent events in the economy and in the markets.  I describe what has worked particularly well and what has not, along with any changes I anticipate making in the coming month(s).  Folio Investing, my investment platform, provides direct access to account information for clients, including performance analysis.


  • Not less often than each year, I communicate with clients to get an update of their financial situation and any change in their risk profile or performance objectives.

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