Our Approach to Investing

We view our initial interaction with you as the most critical step in our process. Every piece of advice we provide is predicated upon our ability to understand and connect with you.

• Understand your family structure and decision-making process
• Help you define what wealth means to your family
• Discuss goals for your wealth and your objectives
• Develop a holistic understanding of your entire financial balance sheet

Proper wealth planning has the most impact on transferring wealth to future generations or philanthropic endeavors. No amount of investment acumen can overcome poor planning.

• Assess your cash flow needs and liquidity requirements
• Create a philanthropic plan and areas of interest
• Partner with your other advisors in tax and estate planning
• Discuss how the investment plan is impacted by the estate and tax plan

Portfolio construction is the union of our independent investment research and client-centric focus. We will customize our asset allocation and manager research to reflect your investment and financial plan while optimizing for tax, time horizon and investment goals.

• Review existing investment portfolio and how to transition
• Bring a behavioral finance perspective on your engagement, decision-making, risk tolerance, and belief in manager skill
• Customize portfolio recommendations for liquidity and income needs
• Incorporate unique assets, business interests, or concentrated holdings

Our best-in-class reporting technology allows us to communicate our performance and valuations to custom goals and objectives.

• We welcome performance conversations and accountability to index comparisons
• Our online portal allows you to customize your views and experience
• Feedback on how you feel about the portfolio and changes in value is critical to our ongoing portfolio construction
• Discuss changes in your financial goals over time

We conduct a regular formal review of each client portfolio to assess positioning versus strategic goals. We will take both offensive and defensive actions in portfolios to add value while recognizing the certainty of taxes and the difficulty of predicting market outcomes.

• Rebalancing is a discipline
• Customizing our centralized advice team’s market views for your portfolio
• Continual dialogue with your key advisors on future planning opportunities

Asset allocation is the process of determining how a portfolio should be built based on capital market assumptions for each asset class. We believe assumptions should be treated as just that, serving only as guideposts for making long-term decisions. We want clients to better understand the role each investment plays in their portfolio by defining each asset class in one of three categories:

• Growth: Asset classes that provide investment return primarily through price appreciation and the willingness of a future buyer to purchase the asset at a higher price. This asset class also has substantial risk of loss in terms of price decline or default. Growth assets have the widest dispersion of return outcomes.
• Preservation: Asset classes that seek to preserve investment value and provide consistent coupon payments to investors. These investments generally have a redeemable value or very low volatility of their return outcomes. The majority of the return should be income payments as opposed to price movement.
• Inflation Hedging: Asset classes whose return is often tied directly to consumption or inflation perceptions. Returns can be a mixture of price appreciation and income, with more modest dispersion of return outcomes. These assets have scarcity or replacement value.

By defining each investment in these three broad categories, we can better align your portfolio’s objectives with our advice.

A manager research process that attempts to out-perform will need a unique philosophy and process to achieve that goal. Our philosophy centers on the organizational structure, finding firms at the right point in time, and making sure their investment process is differentiated from an index. Our process is detailed, and spends more time on qualitative attributes of a manager than their performance.

• Organization: We invest in firms that look like ours: majority employee-owned. We invest with specialists focused on a narrow set of strategies and deep industry experience. We believe continuity of organization and team is critical in maintaining sustainable value-add.
• Manager Evolution: Managers go through a lifecycle similar to any product cycle. There are different characteristics to investing with a manager during its Startup, Growth, Maturity, and Decline phases. We focus on managers early in their evolution where incentives are aligned, other investors are far less likely to find them, and the trappings of success have not taken hold.
• Active Management: Index performance is now widely available through ETFs and index funds and there is no reason to pay active management fees to achieve index performance. We seek managers who have the ability to differentiate both in terms of the asset base and investment process from an index.
• Positive Self-selection: The boutique nature of our firm, and the size of our collective investor base, allows us to recommend managers that are overlooked by larger banks and wirehouses.

The research process does not end with an initial investment, it continues as we gain more data points on a monthly, quarterly and annual basis.