Investment Management: Intelligent Asset Allocation
When the market seesaws, your investment framework is solid. We help clients create a systematic, rational framework for making investment decisions, aimed at realizing your most important life goals.
Every relationship starts with a financial review to to form a logical basis for accepting and rejecting risk in the investment plan, to determine each client’s financial situation, investment objectives, and risk-taking capacity. Based on this review, we provide a written Investment Policy Statement (IPS), summarizing objectives, allocation guidelines, investment restrictions, reporting and performance goals. The IPS provides a strategic roadmap and a shared mindset for dealing with market fluctuations, one of the more vexing aspects of investing for many people.
Looking to the future in any financial plan reveals many unknowns and a range of potential outcomes. TWM's investment approach embraces building in margins of safety and emphasizes narrowing the range of potential planning outcomes, increasing the odds of success. Therefore, our focus is not on timing or forecasting markets, which may widen the range of plan outcomes, but rather on dependably capturing asset class returns over the life of the plan in a prudently balanced way.
Our evidence based approach seeks to manage those factors of return we can control and which add incremental value, called "Advisor's Alpha," over the life of your plan. These are the fundamental determinants of investment success:
- Asset Allocation -- adopting a plan appropriate mix of asset classes establishing an essential trade-off between risk and return in a portfolio, and largely defining the range of ups and downs along the way
- Diversification -- spreading risk within each asset class to limit business specific risks, but also to widen the opportunity set
- Expenses -- keeping them low
- Psychology -- "knowing thyself" and managing our own behavior, a significant variable for many investors, and an overarching motivation for TWM's investment framework
- Price -- maintaining a prudent regard for investment valuations, faithfully rebalancing portfolios, avoiding "following" hot markets, and taking advantage of low-priced markets if possible
- Tax -- minimizing taxes through low turnover disciplines, tax harvesting and tax location strategies
- Saving and Spending -- how much money we save toward our goals and how we eventually spend down from investments.
Intelligent + Asset Allocation
Our strategy adapts the benefits of a systematic, endowment style of investing to the unique concerns and goals of individual investors. While asset allocation and diversification are the primary determinants of risk and return in a portfolio, we retain a healthy regard for the price paid and relative value of investments -- another thing one can control.
Finally, our experience teaches us that education and consistent, focused communication is essential to the success of an investment plan and an advisory relationship.