INvestment philosophY

"I am more concerned about the return of my money, than the return on my money." (Mark Twain)

Our investment advice is focused on the age of the client, their risk tolerance, and the importance of their retirement assets. Age is extremely critical factor in the selection of investments. A 60 year old does not have the "time to recover" the losses that inevitably take place in the equity/bond markets. The "time value" of money is tenet that few investors understand. A loss of 40% will require a return of 75% to get back to even!  Does it really make sense to invest your hard earned dollars with money managers who take too much risk? Sure, you can have some very good years in a Bull Market, but when the "Bear comes growling"; you will take a beating. The overriding precept we stand by is: Low Cost/Low Volatility. The idea is not to have the participant's money on the "Wall Street Roller Coaster." 

As for risk tolerance, few investors have the stomach for the losses, but they certainly will take the big gains. It is best to temper expectations and try to obtain a return that is running about 3-4% above the inflation rate. This hurdle is best accomplished by using index investing for the majors (Active managers generally are unable to outperform the indexes in 80-90% of the time). That said, small capitalization /international equities are a different ballgame and seem to be better suited for the analysis/timing of active management. Furthermore, the bond markets have become so unstable that one needs a quality management team to make the right choices.

We take all the above into account when a "line-up" of mutual funds/ETFs/CITs are recommended for

an entity's retirement plan. Our belief is "Less is More" in so far as the number of selections available to the participants. We actually prefer no more than 3 "Professionally Managed" portfolios (Conservative, Balanced, Growth) with a Stable Value Fund for cash equivalents. Nonetheless, a plan sponsor can allow "true" self-direction of contributions (i.e. brokerage account, alternative investments, outside money manager) as long as there is an understanding of fiduciary obligations and exposure.

The management of Cash Balance/Traditional Defined Benefit assets is a completely different animal as these plans are "ruled" by actuarial calculations. The "pooled assets" need to be invested in conjunction with interest rate assumptions with the ultimate goal of "assets equaling liabilities." Additionally, the client should not be exposed to wide variances of annual contributions due to erratic investment results. Liquidity is always an issue as terminated participants either enter "pay status" or can accept a "lump sum" distribution. Ultimately, the portfolios are designed to protect principal and produce a ​"reasonable rate of return."