Once the integrated planning work has been mapped out, we then move to the Investment Management stage.
There are six steps in our investment process.
Step 1 – Client Discovery
We start with each family’s unique combination of objectives, desires, resources and constraints, gathered from our client discovery conversations.
Step 2 – Risk Allocation
We then analyze a family’s existing net worth using our unique risk assessment approach. While each family is distinct, in principle, we believe that their lifetime needs should be ‘immunized’ with very conservative assets. Their legacy objectives (estates, bequests, etc.) can often afford a higher risk / return character.
Step 3 – Asset Allocation
The above information, in conjunction with an understanding of the economic environment and investment alternatives, leads to an asset allocation decision. It ensures a diversified, risk-appropriate portfolio designed to achieve each client’s objectives. We capture all of this in an Investment Policy Statement, which becomes the framework for all future investment decisions.
Step 4 – Asset Location
We then focus on creating the most tax efficient result for a family’s net worth by locating the assets in the most appropriate legal entities.
Step 5 – Manager Selection / Oversight
Suitable discretionary investment managers are then chosen from among a carefully selected universe of professional firms, who act as sub-advisors. Each manager recommends a customized portfolio to suit the client’s requirements, which we implement for clients on a segregated basis. We choose managers based on a number of factors including quality of people, a sensible investment approach, degree of correlation with other managers, and consistent investment performance.
Step 6 – Reporting and Review
We monitor and review the investment managers to ensure they are meeting agreed-upon objectives and have not altered their investment philosophy from the mandate that we hired them to perform. We are also alert to changes that have occurred within the family and / or the economic environment to determine if any adjustments need to be made to the portfolio.
Our approach to family investment management is founded on five objectives:
Meeting client goals – We work to ensure our clients’ investments are managed in a manner consistent with their goals.
Capital preservation – We protect our clients’ investments through a conservative approach with appropriate diversification and inflation protection.
Superior risk-adjusted returns – We identify, select and combine best-in-class investment managers, who are specialists in their fields and have the potential to deliver superior risk-adjusted returns.
Diversification – We ensure client portfolios are well diversified – by asset class, region, manager style, industry group and security – which tends to reduce volatility, enhance capital preservation and increase overall returns per unit of risk.
Tax-efficiency – Taxes eat away significantly at investors’ returns, particularly in low-return environments. We take advantage of tools and structures that can reduce the negative impact taxes have on returns.