Investment Management Process
Once it is determined that the scope of work will be limited to Investment Management (i.e. the client is seeking Investment Management exclusively) an agreement is signed.
We typically discuss the Comprehensive Financial Planning service, but some do ask for Investment Management only. We do offer this as a standalone service, but do not have the complete financial picture in this situation. So, we limit our advice to the investment and retirement accounts.
We first gather the information we need in order to offer advice. The set of information includes the client's personal information, their individual objectives, time horizon, tax situation and most importantly their tolerance for risk. We consider risk tolerance to be the most important factor. So, we work to measure and understand risk tolerance.
Next, we make a recommendation regarding investment strategy. Once a strategy is agreed upon it is outlined in an investment policy statement - which is signed by both the client and Paul McNair.
We then begin our work of advice and management of the investment portfolio.
Most times we present a snapshot of the existing portfolio of investments - and make our analysis, comments and initial recommendations. This normally includes any employer retirement plan accounts.
If it is recommended that the client consolidate accounts at Charles Schwab & Co., Inc. we advise as to what types of accounts are needed and then complete the applications and transfer forms. Holding accounts at Schwab is not a requirement of working with us - but in many cases there are clear reasons to consolidate. Plus, most are looking to organize, consolidate and generally "clean up" their accounts by having all with one qualified custodian, managed under a cohesive strategy.
We then prepare and present a detailed portfolio proposal. This also includes the employer retirement plan accounts – and our detailed recommendations regarding how to allocate those funds.
When it comes to employer retirement plan accounts we work to understand the plan, costs and investment options in detail. We review the investment options independently (if possible) and select what we believe to be the best options for the strategy. Then set an allocation that fits with the strategy.
Once the client agrees with the proposed portfolio of investments we begin with implementation, thoughtfully – particularly in elevated markets or periods of volatility.
We are involved with implementation, especially with accounts held at Schwab – since we do have trading authorization on those accounts. Note, though, that we never have withdrawal power on Schwab accounts. Our authorization on accounts is limited.
Once implemented we begin monitoring and tracking the portfolio – the investments, the allocation and the performance. We also track contributions and withdrawals carefully.
And, our work together continues. We stay in touch and meet regularly. For most, after implementation, we meet semi-annually to review the portfolio in detail.
We review, rebalance periodically, track the individual investments over time, adjust the strategy as necessary – and partner, long term, for prudent management of the portfolio.
We also help to take the emotion out of investing. Because, as it has been said “emotion is the enemy of sound investing.”