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Additional Resources |
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Setting the Right Course |
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Every pension, endowment or foundation starts by designing a Master Plan that includes their assumptions about contributions, spending and risk. We believe a similar approach is needed for individuals and their families. A Master Plan is a living document, and provides a financial snapshot of the current assumptions and funding status of the plan. In simple terms, the goal is to determine whether you are currently over funded or under funded to reach your future aspirations and obligations. Every review meeting begins with an analysis of the plan, and every major financial decision or unexpected change prompts a review of the plan. Your Master Plan becomes the pillar of your financial life. Step 1. Identifying Your Financial Life Goals Every one of us wants to meet our financial obligations without compromise, but we also have aspirations beyond our current commitments. Our advisers work through a predictable and consistent approach to identifying your current expectations, and establishing specific milestones throughout your lifetime. Step 2. Understanding Your Priorities For most investors, both institutions and individuals, there are only 5 aspects of their financial life that they truly control. These five levers can also be called the plan assumptions. They are: |
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We work with you to balance your priorities, applying these five factors in the process of creating your plan. We examine your “ideal” lifestyle against your “acceptable” lifestyle, and guide you in making the right tradeoffs for you, while staying on track to live your One Best Financial Life. Step 3. Measuring the Probability for Success We use an advanced scenario analysis system to measure the probability of your plan working. This is a scientific discipline which analyzes 1,000 simulations or financial “lifetimes” using actual market performance dating back to 1929. Included in the simulations are optimistic and pessimistic scenarios that have never occurred in the market’s history. A Financial Control Scorecard™ (FCS) gives you exact historical probabilities of how often, for your anticipated lifespan, you would have exceeded or failed to reach your financial goals. This analysis gives us a sense of your funding status. Step 4. Making Adjustments Along the Way Unforeseen events drive the majority of financial decisions that individuals and families make. These events could be from external factors like tax code changes or personal factors like an unforeseen illness or an inheritance. How you choose to balance and adjust your control factors over the course of time to address these events is something your adviser works with you on every step of the way, using your Master Plan as their guide. We start every meeting by reviewing your plan assumptions with you to assure we are still on course. |
Implementing Your Master Plan |
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From your Master Plan, and after understanding your risk desires, we build your Investment Policy Statement (IPS). The IPS outlines your current targeted overall asset allocation, the overall target risk profile and more explicitly any specific investment areas you would like to include or exclude. Whenever there is a change to your overall risk profile, your IPS is adjusted. Step 1. Asset Allocation Working with your target asset allocation, which typically includes bonds and stocks from the US and around the world, we determine what role alternative investments should play and how they might help to capture diversified growth where possible. We understand that as your Master Plan evolves over time your allocation will shift as well, and we are designed to offer all of the flexibility to implement the changes as seamlessly as possible. Step 2. Implementing the Allocation The allocation can be implemented with Separate Accounts, Hedge Funds, Mutual Funds or Exchange Traded Funds (ETFs), and we work with you to determine which combination of managers and investment vehicles is most appropriate for you. We objectively allocate across asset classes including non-traditional or alternative investments to manage your risk and try to invest in a way that keeps you well diversified for all market conditions. Our team of CFAs and MBAs screen and research the universe of available investment alternatives to find you the right way to implement your chosen asset allocation. Step 3. Oversight and Reporting Keeping you on top of what is happening and understanding what your portfolios are doing is crucial to giving you the comfort and the control that you need. We have state of the art reporting that consolidates all of your holdings into one simple statement that is updated daily and can be accessed anytime. |
