Managing Your Wealth Is Our Focus.
Wealth Management is a high level of financial service. The term is often misused by those brokers or insurance agents who want to sell you some expensive financial product. Real wealth management consists of comprehensive financial planning and portfolio management with a level of personal service that goes beyond the traditional banking, brokerage and insurance services. Wealth management should be about you, your vision for your future and the legacy you want to provide your family, friends and your philanthropic endeavors after you are gone.
The Wealth Management Process
Wealth management is a process that integrates Financial Planning and Portfolio Management. Financial Planning is an extremely complex skill. It requires years of training, on-going continuing education, demonstration of skill by the successful passing of board certified exams and experience. Its components are not only complex but also mutually dependent upon one another. The interrelationships of these components are the backbone of our Plan.Achieve.Live® service. This process is intended to keep our clients on track toward achieving their goals. Since all of the planning components are directly interrelated and interdependent upon the overall wealth management process, it is important to keep in mind that other financial professionals who may also be providing guidance with taxes or estate planning matters (Accountants, Attorneys, Brokers, etc.) may not be fully aware of the wealth management process. Therefore, their recommendations or suggestions, taken in isolation, may not seamlessly integrate into one’s overall wealth management plan. It is therefore very important that clients contact their advisor before implementing any recommendation in isolation of their overall wealth management plan.
Another important component of our Plan. Achieve. Live.® process is asset allocation. The asset allocation is what determines the majority of a portfolio’s return. When we develop a client’s wealth management plan, we take into consideration a number of factors, among them: their age, time horizon, risk tolerance, cash flow needs, tax bracket, goals and more. We have always been very conservative in the assumptions we use in our wealth management process. What this means is that we are more likely to consistently produce the returns we are looking for, with lower risk over longer periods of time. We take issue with some of our colleagues in the financial industry whom we believe seek greater returns with high-risk vehicles without regard for the client’s risk tolerance and goals. Asset Allocation is such an important part of a client’s overall wealth management strategy that in addition to our regular reviews, we monitor a client’s plan against their risk tolerance, and asset allocation factors. By doing this we are, in fact, double-checking our clients’ positions based on our experience and their tolerance for risk. We then make appropriate adjustments along the way. In the quarterly report we send to our clients, we ask them to review their asset allocation and any changes we may have recommended. An asset allocation review should be done whenever there is a change in lifestyle or material change in one’s financial responsibilities. We believe that clients who continuously communicate their financial situation with their advisor are more likely to achieve their goals.
Rebalancing Your Portfolio
Rebalancing is the component of your plan that keeps it real. It is human nature to always want more of a good thing, but it is just that approach that can lead to less than desirable portfolio results. Therefore, our process guides us to sell a portion of the portfolio that has recently done well and allocate the proceeds to the portion of the portfolio that has not recently performed as well. This technique is called rebalancing. It allows us to sell some of an asset class when it is high and buy some of another asset class when it is low. After all, isn’t that what you are supposed to do – buy low and sell high? Disciplined rebalancing of a portfolio reduces exposure to asset classes that may have performed well and may now be overvalued. It usually requires us to sell a portion of an asset class that is performing well and purchase an asset class that is underperforming. Individual investors usually do the opposite and buy assets that are now performing well. Rebalancing of your holdings helps remove the emotion from the investing process.
Your involvement in and understanding of our Plan. Achieve. Live. process is very important to us. From this process we develop strategies and action plans that guide the activities we perform on your behalf. In some cases the effects of our direction are subtle and may go unnoticed while at other times changes we make are more visible. Whether your portfolio needs changes large or small, our Plan. Achieve. Live. process is used for all of our client recommendations. This service is recommended for individuals with an investment portfolio of at least $1.2 million.
Plan. Achieve. Live.® is a service mark of R.W. Rogé & Company, Inc. All Rights Reserved.
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