In considering working with a firm it is essential to have a good grasp of their business philosophy. Indeed, business philosophies can be quite heterogeneous across firms, whether they be anything from a fine clothier to a financial management firm. And even if a philosophy is not formally stated, every firm has and lives one. In this spirit, we have found it helpful to share to our philosophy to help others discern if we are right for them and they for us.
Fundamentally, we see our business as several things:
- Helping clients create and grow wealth.
- Helping clients protect and preserve their wealth over the long term.
- Planning the distribution of wealth in the most tax-advantaged way during life.
- Planning the distribution of wealth intergenerational in the most tax-advantaged way.
- Tying all of the pieces together from 1. through 4. while maximizing possible business interests, adding global considerations, reviewing asset domicile decisions, and incorporating any philanthropic plans.
We believe obtaining and preserving financial success is a process, not a product. “Process” is defined in the American Heritage dictionary: “A controlled sequence of events, a series of actions, changes, or functions bringing about a result.” Thus, we believe financial strategizing is a serious endeavor and should not be done haphazardly or without a plan. The result should be your financial well-being and security.
Salesperson, Money Manager or Wealth Manager
Now the delivery of this process can occur through three primary avenues: an investment salesperson, a money manager, and a wealth manager. A salesperson is in the business of selling investments, often without much of a cohesive plan. A money manager is one who manages the day-to-day investment decisions — what to buy or sell that day (e.g., a mutual fund or bank trust fund). Meanwhile, a wealth manager is one who orchestrates the investment and financial planning process with his clients and a client’s other advisers. Wealth management is what we do.
We are client driven and solely concerned with helping our clients meet their life goals through the proper management of their financial resources. Our success is not measured by performance statistics but rather by our clients’ success in achieving their goals. Our orientation and focus are on our clients and their goals, not just on markets. Our job is not to provide the highest return but the highest probability of meeting your financial needs and objectives.
We believe that there is more to financial success than just picking the next hot stock. We follow a very strict wealth management process using very sophisticated analytical tools to help us educate and guide our clients in developing the most efficient combination of investments using the Nobel Prize winning principles of modern finance. We believe that wealth management is managing the entire financial process, rather than just sticking a bunch of investments into an account. It has been shown that the whole is greater than the sum of its parts. Therefore, we help our clients manage the whole process in order to develop a portfolio of investments that will help them meet their goals on a risk-adjusted basis. To do this we must know our clients. But to do this we must also have knowledge and experience.
To this end, we have worked very hard to obtain professional designations and certifications, including the CERTIFIED FINANCIAL PLANNER (CFP®), the Chartered Financial Consultant (ChFC) designation, the Chartered Life Underwriter (CLU) designation, and the Certified Investment Management Analyst (CIMA®). Further, our practice’s Chief Strategist, Dylan Minor, has also obtained a Master of Science in Business Administration from UC Berkeley and a PhD in Business Economics through UC Berkeley. We believe we are only as good as the advice we can offer, which comes from building our value to clients, and continually staying current on financial concerns to maintain this value. One of these biggest concerns is risk.
Leaky Valves: “Let’s say you want to build a valve without any leaks. The problem is, in the real world, there are only leaky valves. So in this reality you have to determine how much leak you can tolerate.” — Apollo Scientist
The wealth management process is risk-ridden. We have found that most people have little understanding of how much risk they are actually taking and how to evaluate it, yet alone manage it. Our goal is to educate our clients about risk, not only the risk of their investments but also the risk of their family’s not maintaining a financially secure future. Risk education goes hand-in-hand with having realistic expectations. Clients with unrealistic expectations about investment performance generally take more risk than they realize.
We evaluate risk from the perspective of the whole client portfolio and financial position. The risks of individual investments must be understood within the context of the entire holdings, including real estate, businesses, and possible global assets of the client. This is why we spend much of our time helping clients understand risk and then work with them to determine their risk tolerance. We discourage large concentrations in single investments and seek to encourage proper diversification. We also require expected premiums from any illiquid investments. We feel it is not only important for the client to know where to invest but how and why to invest.
Investment Policy Statement (IPS)
In helping clients develop a sound investment and wealth management plan it is essential that our clients provide us with a complete picture of their personal and financial life. This includes, but is not limited to, tax situation, bank accounts, real estate holdings, investment accounts, retirement accounts, business holdings, and global holdings, in order to develop an investment policy statement. The Investment Policy Statement (IPS) is guided by the client’s risk tolerance evaluation along with an outline of his or her goals and time horizons. While the investment policy statement is always driven by the client and can be changed, as the client requires, once established, all investment and financial decisions are made through the lens of the investment policy statement. It helps to maintain sound focus and accountability to a well thought out investment plan so as to help reduce panic while seeking managed risk.
Implementation & Monitoring
We do not sell hot investments to people. Once we develop the investment policy statement and the strategic asset allocation of client holdings, we only use a professionally managed approach to investing. We do this primarily through the use of professional, institutional money management and indexing—both in traditional assets and alternative investments. We do not focus on trading stocks, bonds and other investments. Instead, we develop a portfolio with a core exposed to some key market indices and then search for increased value by exploring some additional investments.
Once the investment policy is implemented, we then monitor the process and strategically rebalance those investments. Another important component of monitoring is also monitoring our clients’ lives to make appropriate adjustments to their plan as needed.
Estate Planning Strategies
“I’ve got all the money I’ll ever need if I die by 4 o’clock.” — Henny Youngman
Estate planning is an important part of the wealth management process and important to the financial security of the entire family tree. Often clients don’t realize that the IRS might be one of their heirs. The question then is, “How much do you want to leave them?” So, when appropriate, we encourage our clients to review their estate plan with us. Through the estate planning review process and the services we provide, we can work with our clients’ estate attorneys to help plan for the most tax-efficient manner with which to pass on clients’ estates to multiple generations to come. Philanthropy is also often a critical part of a comprehensive estate plan.
Knowledge, Ethics and Service
Of paramount priority is our relationship with clients. This relationship involves our having knowledge and experience in the many areas of wealth management as well as, very importantly, ethics and respect. We are committed to putting our client’s interest first. This means transparency and maintaining our independence. And, this is why we made the decision to operate as an Independent Registered Investment Advisor: We do not want to be tied to a bank or Wall Street Firm.
An important part of our philosophy is to provide an extraordinary level of client care and service in the delivery of our holistic planning. Our aim is to make the management of your financial wellbeing a truly enjoyable experience– akin to a perfectly good cruise or shopping trip.
We also see a part of our service as setting a high standard of advisory services not only within our industry but also across industries. And in this spirit, we aim to have a positive effect on the community around us, whether it be helping a family have a more financially sound life or providing philanthropic service.
There are many ways to invest. There are many ways to obtain financial and investment services. Ours is not the only way; it is simply our way. Our approach is always client-driven. As such performance is measured not by whether your investment(s) “beat the market” or whether you’re doing better than your neighbor. It is measured by whether you are meeting your goals within an acceptable range of expectations and have financial security. It is about an exceptional client service experience. It is about making the world a better place than we found it.