Have you ever wondered what goes into the strategy for investing our clients’ funds? What does that process look like and how is it different for each client? We’d like to give you a peek behind the curtain at what we do to prepare and customize an investment strategy for each client.
It all starts with research, research, research!
Each of our financial advisors spends years building up the experience and certifications that are required to properly formulate a financial plan. In addition to that, both Gabe Lapito and Ryan Gomendi spend hours each week on market research following market signals, events, trends, and many other momentum-based factors that make up the ebbs and flows of daily market activity. That research starts with deep looks into 100+ investments options including mutual funds, Exchange Traded Funds (ETF), individual stocks, and alternative asset classes. From there, our team will make monthly calls with Chartered Financial Analysts (CFA) from different money managers across major asset classes ranging from Fixed Income to US Based Equities through International, Emerging Markets, and into Commodities and Alternative Asset Classes to ensure there is proper diversification and to look for any outside trends we should be prepared for.
Once we’ve done our internal research, Gabe and Ryan will go outside the office to have multiple Due Diligence meetings throughout the year with money managers, which consist of multiple days of deep examination within a specific fund or asset class. They study these money managers to understand not only why they have the holdings they have, but how they are managing them. We then routinely send our portfolio to various money managers to analyze and compare against benchmarks and examine different scenarios to better understand threats and opportunities within our investment mix. Finally, Gabe and Ryan come together to discuss their individual research and develop consistent models for our firm based on different risk tolerance levels. So, whether you talk with Gabe or Ryan, the portfolio recommendation will be similar because everyone is on the same page.
Next, we listen.
After the research foundation is in place, we are ready to sit down and have a serious and meaningful conversation with our clients about what risk means to them. These kinds of conversations can only be had after a solid personal relationship is built with a client. Sometimes these conversations can be challenging because different parties in the family may view risk differently. To try and aid in our understanding, we utilize a sophisticated behavioral science tool that rates a person’s risk tolerance as it relates to behavioral finance. This tool helps us walk through different scenarios with a client to see how they feel about risk and ends with a unique score the represents their comfort level with risk in their financial plan. By having a common language and score, we have found that it creates a better understanding for all parties involved and provides clarity for all.
Once everyone clearly understands their risk score, our team can combine the years of experience and research mentioned above with the deep understanding of our clients’ wishes and risk tolerance to build a unique and custom investment portfolio tailored to them. It doesn’t end there, however. Each portfolio is regularly reviewed and discussed with each client to make sure we are holding true to the risk comfort level discussed and opportunities or threats that may come up throughout a market cycle. It is a very cyclical process.
We hope you’ve found this look into how we prepare for client investments interesting and helpful. We believe that proper education around our holistic financial planning strategy not only helps our clients but also provides accountability as we strive to be stewards of your complete retirement. If you are already a client at SRP, we have great news: all the activities above are already in process as we work with you to build and maintain your portfolio! If we haven’t had the pleasure of meeting you yet, we would love the opportunity to visit with you about your investments and how they fit into your overall financial plan. Give us a call today!