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There are thousands of financial planners you could do business with. You should understand their process, how they manage your financial planning needs, and what their investment philosophy is before making a final decision. There is a chance, if you choose the right advisor, it could be a relationship that lasts decades.  Why not make sure their beliefs align with yours upfront?

Planning First

I believe in a planning first investment philosophy. I want to know your goals and priorities before we discuss the investments you own or my recommendations.  You can read more about my financial planning philosophy here.  Once I have a thorough understanding of your goals, I want to understand your tolerance for risk.   

Quantify Risk

Before we invest our clients’ money, we ask them to complete a risk tolerance questionnaire. My conservative and yours are probably different, so let’s make sure we’re on the same page. Risk tolerance is uniquely specific to you, the investor, and no one can give you the “right” answer, but you. I also understand that it may change over time, so we’ll revisit it regularly. 

Diversification Matters

Diversification is planning for potential risks, knowing they may not happen, but executing the plan anyway.  Asset classes rotate their podium rankings every year and guessing which will be on the top next is nearly impossible.  Through proper diversification, at some point, you’ll likely lag a major index, be upset with your annual returns, and possibly your advisor, but charts like these show why diversification matters.

Investment Returns

Chasing returns or mirroring an index’s return is not our goal, nor should it be yours.  Understanding your goals is my number one priority. Once I understand your goals, I will determine the returns you need to achieve them. From there, I will build a portfolio that has historically produced the needed returns to achieve your goals.

Control Costs

We believe a majority of your assets should be in low cost, passive investments, not actively managed mutual funds.  This study shows how difficult it is to beat the market and how few actually do. Studies like this are a reminder you don’t always get what you pay for.

Be Tax-Smart

When possible, we want you to own tax-inefficient investments in your retirement accounts and tax-efficient investments in your taxable accounts.  Mutual fund capital gain distributions, rebalancing, and raising cash can be a drag on performance and your tax returns.

Investing vs. Trading

No one knows how long the market will go up or stop going down.  We don’t pretend to know, try to forecast, or attempt to make an educated guess on which direction the market will take us.  If you are trying to do these things, you are trading, not investing. A study was conducted showing traders beat the market around one percent of the time. If you are trading, the odds are not in your favor.

Timing the Market

Making investment decisions based on today’s news is a fool’s errand.  Big headlines grab our attention, drive ratings, and increases viewership.  Those outlets aren’t held accountable for their often-ill-advised recommendations.  Remember, they are entertainers as much as reporters.