Account maintenance is not glamorous, flashy or sexy. However, carefully tending your account adds substantial value over time. While you may seldom notice it, it goes on in the background in every one of our accounts as part of our comprehensive, continuous discretionary management mission. We take care of the dreary, tedious details so you can enjoy the things that are important to you and rest assured that your investments are being professionally managed.
A professionally run investment process does not mean hyperactive trading or even generating occasional trades just to demonstrate that we are doing something for you. Frequent trades and speculation are not in your best interest, and we have plenty to do without generating transactions for “window dressing”.
During the initial getting to know you period, we carefully asses your risk tolerance, goals, and time horizon to design a tailored strategic asset allocation plan that meets your needs. It’s important that you know you have sufficient liquidity to weather any financial storm and meet your distribution requirements on time while providing sufficient growth potential to meet your family’s longer term objectives. It’s a balancing act. You should not take any more risk than you are comfortable with financially and emotionally. We firmly believe that sleeping well is a legitimate financial objective. But, you must take enough risk to earn the returns you need to get you to your goals.
Once you are comfortable that our suggested asset allocation plan meets your unique needs, we take over to execute, monitor and maintain the plan on your behalf. You are now free to travel around the world. We have your back.
For each asset class in your plan, we will select the best fund available based on cost, diversification, methodology, and fidelity to the asset class. Our core belief that passive funds provide the lowest cost, widest diversification, lowest risk, lowest tax exposure and highest probability of success drives the selection process. Some of the funds will be restricted to clients of advisors, while others may be available to the general public. But, each will be selected on its merits because we believe that they are “best of class”. Each fund will be properly registered, audited, regulated, marked to market daily, and completely liquid.
Assets grow and follow different trajectories as markets evolve. Rebalancing maintains the agreed asset allocation, and risk profile that you selected. However, because markets have a well established pattern of regressing to the mean, rebalancing offers the opportunity to capture additional returns through a consistent pattern of selling high and buying low when an asset class exceeds predetermined tolerances. The triggers we have selected balance the requirement to maintain our strategy within narrow tolerances with our belief that too frequent trading drives up costs and tax exposure with little benefit. Our sophisticate internal systems identify opportunities as they present themselves so that we can capitalize on them for you before they are lost.
Tax Minimization Strategies
Taxes are by far the biggest expense investors face. Each dollar captured by the IRS, is a dead drag on performance and accumulations. Once it flies off to the IRS, it’s not coming back. So, a tax minimization strategy will yield big dividends for taxable accounts. We employ several different tactics to limit your exposure to taxes:
Tax Loss Harvesting
If any of your securities experience a decline in value from your adjusted purchase prices our management systems will detect it and we can sell those securities to recognize a tax loss. This loss can later be used to wash against any other gains you may have either inside your portfolio or as the result of the sale of any other asset. So, it’s like having money in the bank to use to pay future gains. At the time of sale of the asset we can buy a similar fund representing the asset class so that you remain exposed to the class for the duration of the transaction. At the end of the 31 day “wash sale” period we can repurchase the original asset while retaining the loss to carry forward. No one likes seeing any asset class decline in value, but over time they all recover and go on to new highs. Meanwhile it’s like turning a lemon into lemonade.
Dividend and Capital Gain Avoidance
Mutual fund and ETF dividends and capital gains distributions are normally taxable. But, in many cases they can be avoided by selling the security prior to a known distribution. If the tax cost of selling the security prior to the distribution is less than the cost of paying the tax on the distribution, we can sell it to eliminate or minimize the impact. Because each client has a different cost basis for each holding, our systems examine every asset in every taxable account to discover opportunities.
Asset location strategies
Because some asset classes have higher turnover and dividends, where possible our strategy is to place higher tax generating assets inside tax deferred accounts. Each client presents a different combination of taxable and tax deferred accounts, so this determination must be made on an individual basis.
Review accounts continuously to reduce costs or risks
The market continuously evolves and improves choices for the sophisticated investors. Prices have fallen dramatically for both ETFs and traditional index funds. We want to capture that benefit for you. If we have the opportunity to switch to a lower cost but substantially similar product without generating a tax cost to you, we will automatically make the change for you. However, each account and each holding has a different cost basis, so that decision must be made on an individual account basis.
Evaluate alternative strategies and new asset classes continuously
As markets evolve, new products and asset classes become available that have the potential to increase returns and/or reduce risk at the portfolio level. Our investment committee meets regularly to evaluate the opportunities for you. Along with the very good, Wall Street churns out a number of products that range from bad to toxic. So we are diligent in reviewing new offerings and very conservative in adopting new strategies until they are widely accepted and time tested.
You are never out of the loop. You will have the big picture and all the detail you need to support it. We report to you performance over multiple time periods, attribution analysis, holdings, costs, account actions, additions and distributions. You will get a complete consolidated picture of all your accounts with us, including pensions, IRAs, and taxable accounts.
We don’t custody assets. Your every cent is held by a leading discount brokerage in your name. You can always cross check with your custodian’s web site or printed statements. We reconcile every account to the penny every night against your custodian.
Manage cash flows
Whether you are taking distributions or making deposits, every cash flow gives us the opportunity to rebalance the portfolio. If you are taking regular distributions, we will make sure it gets to your account every month at the same time so you can have confidence the funds are there when you need them. And if you are required to make Required Minimum Distributions (RMDs) from your tax deferred accounts, we monitor to make sure you don’t get any unpleasant surprises from the IRS.
Professional Advisor Team
You will have a team of two professionals advisors that have in depth knowledge of your situation and goals. All Investor Solutions advisors have extensive experience in providing advice and hold both advanced academic degrees and professional certifications. They are a valuable resource for a wide variety of your investment and financial planning questions and concerns.
Your advisor team will hold regular reviews with you to report on account performance and your progress towards meeting your goals. You set the frequency, time and method of meeting to meet your lifestyle and convenience. Whether it’s in our office by telephone or Skype, we are here to serve you.
You can rely on Investor Solutions to manage and maintain your accounts with a professional and disciplined approach that handles the details for you in the back ground so you can have a life and enjoy the things that are important to you. Relax, we have your back.