Often the public thinks of Financial Advisors as securities salesmen or brokers who are out to sell you something. We can act in that capacity through our relationship with Cadaret, Grant & Co., Inc., but 98% of our new business is to function in our capacity as a Registered Investment Advisor (RIA).
Here is how we do business. We believe it is important for us to have our goals aligned. When acting as an Investment Advisor Representative, we either get paid for providing a financial plan or are paid quarterly based upon the value of a client's investments. This structure means that we and our clients have the same goal for their accounts – to manage and help grow your assets in a prudent way.
We normally start by doing a financial plan. This is to help us fully understand the investor's risk tolerance and their goals. It would be as irresponsible for us to use a portfolio strategy, without first gathering this information, as it would for a doctor to prescribe a medicine without fully understanding what is ailing the patient.
Once we've developed a plan, we use Monte Carlo Simulation to test it, then seek to build a balanced portfolio which is commensurate with the ascertained risk and the returns needed to achieve the goals. We use diversification as the cornerstone of our portfolios. On the macro level, we choose between guaranteed products or traditional portfolios, and since no strategy works in all markets, we diversify across investment strategies, asset classes, and portfolio managers.
Where possible, the cornerstone of a portfolio is an allocation to individual bonds. We use these because they have what is referred to as "permanence and definition". That means you know exactly the interest rate you'll earn over the life of the bond and, barring default, you'll know exactly when you get all your money back.
Our equity strategies start with fundamental securities analysis to develop a select list of individual securities. Those securities then get screened daily to see if changes need to be made. In addition to our own strategies, we utilize mutual funds and strategic partnerships to build out our portfolio management team. We also use Harry Markowitz's Modern Portfolio Theory's principal of periodic rebalancing, and tactical strategies which include technical analysis to move us in or out of our holdings.
We follow-up by meeting with our clients periodically, in person or via web conferences, to review their needs and the progress the portfolio is making toward achieving their objectives.