Financial Planning and Portfolio Recommendation
At Enduring Wealth Advisors®, the first step of the financial planning process is getting to know you, your current situation, and your long-run goals. Our job is to listen, contemplate, strategize, and provide recommendations as we pace you through the crossroads of life. With you in mind, a specific portfolio is recommended to pursue your long-term financial goals. We monitor and keep you informed of the progress and adjust the plan along the way.
Asset allocation is a process an investor may use to diversify a portfolio. Diversification is used to help manage risk by spreading the risk over multiple investments. Our well-diversified portfolios have a target asset allocation established by the Enduring Wealth Investment Committee. The Investment Committee is a group of industry professionals selected and headed by the Enduring Wealth team. The portfolio’s asset allocation is based on the underlying investment objective, determined by your goals and your comfort level with risk. In addition to your unique situation, adjustments are made to the asset allocation, given market conditions and opportunities.
Our portfolios primarily consist of a combination of open-end mutual funds (mutual funds) and exchange-traded funds (ETFs); however, we may employ other investment vehicles (i.e., individual stocks, bonds, and so on), given your situation, market condition, and opportunity. The industry refers to mutual funds and ETFs as pooled investments. In pooled investments, the fund manager will pool together the cash received from the investors and then invests the cash. If the value of the assets goes up, so does the value of the pooled investment. Likewise, if the value of the assets goes down, so does the value of the pooled investment.
Navigate the Universe
In the United States, there are thousands of mutual funds and thousands of ETFs that make up the total universe. The industry assigns each mutual fund or ETF to an asset class (or category) within the universe. The asset class indicates broadly in what part of the market the mutual fund or ETF participants.
We first filter the universe by the asset class (or category) in which we are seeking to find an investment, then we apply the following screens:
- The fund is at least an average fund within the category.
- The fund has Average to High Return the category
- The fund has Average to Low Risk the category
Our screen considers the past 3-year and 5-year periods. Though past performance does not guarantee future performance, it does present an element of historical consistency. A fund with a track record of fewer than three years may be considered for a compelling reason but would require an exception.
Selection of Investment
After navigating the universe of mutual funds and ETFs and identifying a handful of candidates, we dive deeper. We examine statistics, investment choices, and management styles of the mutual fund or ETF.
The industry refers to our research of the funds as due diligence. We use industry software, tools, and reports for our analysis. However, the relationship we have with representatives from the fund providers is the most valuable resource.
Strong relationships provide value to the investment process and our clients. Therefore, we prefer to invest in mutual funds and ETFs with companies whose Enduring Wealth Advisors® have an established relationship in good standing. In most cases, a relationship with the company should be developed first before investing. Exceptions are rare.
Ongoing Supervision of Investments
We monitor our portfolios and the investments within on an ongoing basis. However, we perform a rigorous evaluation of our asset allocations and models twice a year. Our models serve as a template for the portfolios we navigate through various market conditions.
Evaluation and Navigation tools include:
- Industry reports
- Portfolio and model performance reports
- Portfolio and model analysis
- Fund analysis with a fund company representative
- Economic and Market research
- Industry conferences
- Investment Colloquium and Summit: An in-house investment conference
Additional methods may be employed to maintain the ongoing supervision that is not listed and may be performed regularly or ad hoc.
In general, our portfolios remain invested. We avoid market timing; trying to move in and out of the market to prevent loss or achieve excess return is a high-risk strategy that may result in failure and lower returns. Although remaining invested does carry risk, in our experience, it is a prudent strategy in the long run. However, given the market conditions, we may adjust cash within the portfolios.
We may sell all of a specific investment due to changes in the allocations, investment restrictions, the client’s specific situation, or the investment’s performance. If multiple areas of concern for an investment arise during our ongoing supervision, the investment is examined and watched more closely. Unless we see signs of improvement, the fund is usually sold immediately or within a year.
Financial planning is a never-ending process. We meet with clients regularly to ensure their financial plan aligns with their goals. Adjustments may be made to your financial plan and portfolio as your situation evolves. We monitor and navigate clients through the complexities of finance, the industry, and the markets. We inform clients and provide them with the information to make prudent financial decisions. Our relationship with you is the most important relationship of the process.