WEALTH MANAGEMENT STRATEGY

Simplified, Low-Fee approach to Wealth Management

Philosophy:

The initial phase of a Wealth Management relationship - agreeing on risk preference which in turn dictates the target allocation (mix between risky assets and low risk assets, typically stocks and bonds) for each client. We then rebalance the client portfolio so that it matches the target allocation. Those two initial steps involve much time and effort. Thereafter, except for future rebalancing events, a typical wealth management portfolio is fairly low maintenance. Hence, we have low fees to start, and even lower fees after the first year.

Furthermore, a Wealth Manager should take responsibility to ensure the client portfolio meets the performance of the chosen target allocation/benchmark. That seems obvious, but how many wealth managers actually do the attribution analysis?

Implementation:

Low fees of only 20 bps in first year, 15 bps in subsequent years ($2,000/year minimum)
Our target allocation is x% stocks, y% bonds based on each client’s risk profile, for example, 60% stock, 40% bonds. Stock portfolios are benchmarked to the MSCI All-World Index, and Bond portfolios are benchmarked to the Bloomberg US Aggregate Bond index.
Our desired implementation would be low-cost index funds/ETF’s to match the target allocation.
We understand that due to tax, cashflow and other considerations, a target portfolio could deviate from the target implementation, and we work with our clients to accommodate those needs.
We review each client’s total portfolio, taking into account IRA’s and 401(k)’s etc. as well as illiquid investments such as real estate, private equity and life insurance, and take those into account.
We measure and attribute performance relative to the chosen benchmark.

BACK TO STRATEGIES