Investment Management

While most financial planners pay exclusive attention to Asset Management, we meld our clients’ Asset Management with their goals.

And the goals of most mature women are to feel assured that they won’t run out of money, and that their money will grow at least to the extent that the price of goods and services increase; i.e., keep pace with inflation, so that the money they send ahead will indeed buy the future goods and services they desire.

There are many financial products in the market, and more being ‘manufactured’ by Wall Street every day. So choosing the ones that best meet your individual needs can be complicated, yet in the hands of our trained investment professionals, it’s not complicated at all.

Sounds so simple right? Yet it isn’t easy.

The impulse or notion of Do It Yourself investing looms large with the internet providing all kinds of ready information, and tantalizingly simply calculators.

Our experience in serving clients over the last 6+ decades is that too often people don’t know what they don’t know. And one poor decision can be exceedingly costly, so why risk that? Why risk the portfolio you’ve built up, especially when the consequences as we age get more dire.

We don’t have as much time to ‘make up’ for a financial mistake as when we were younger; that’s because poor financial decisions often compromise our portfolios ability to compound. And Einstein called Compounding the 8th Wonder of the World. And we agree.

It’s not enough to get our investment right ONCE, our ability to enjoy a rewarding lifestyle today and into the future requires us getting money and investing right, year after year, decade after decade.

As fiduciary fee-only CFP® Practitioners we invest our clients’ monies in Institutional Investments rather than the Retail Investment Menu of investments available to non-investment professionals.

The differences between Institutional Investing and Retail Investing are large; most especially the cost savings with Institutional investing are often significant, as well as the avoidance of ‘herd mentality’ in Institutional investing.

You know, the ‘herd’ of investors reacting to the media’s hype when they shout, “the stock market is crashing!” Retail investors are prone to ‘selling’ at this type of news, because the urgency with which the media pundits are spewing out these words connote, “don’t just sit there, DO something…(stupid).”

And when a lot of people sell out of mutual funds, for example, the mutual fund manager has to settle up the books by 4pm each trading day. In other words, each mutual fund manager has to sell out the requisite number of shares of some stocks in their portfolio to raise enough cash to satisfy the panicked investors’ due. These same mutual fund managers understand full well, that market price drops have historically been followed by a recovery, in due time, yet they are forced to parse through their holdings and select which stocks (or bonds) to sell, at, you guessed it, depressed (and sometimes SIGNIFICANTLY depressed) prices. So, that kind of emotionally driven action penalizes all of the remaining retail investors in that mutual fund, insomuch as that necessity to cash out those sellers at day end, has compromised that mutual fund manager, as well as the long-term return for those who remain invested; i.e., the otherwise more savvy investors.

Institutional investors don’t often fall prey to that type of short-term market volatility sellers, and thus, often reap the higher returns that typically follow.

At Empowered Retirement, Inc. we follow specific recipes that align with our investors’ objectives, seeking to limit downside risk while giving our clients capital appreciation potential. Far be it from us, or anyone to opine on the future direction of the markets, yet we use a disciplined approach, that Dimensional Fund Advisors has developed, which you can learn about here. It’s called Asset Class Investing.

Every client’s allocation of assets will reflect her desired goals, priorities, investment preferences and her tolerance for risk. Asset allocation is an individualized strategy, so there really is no perfect mix of assets.

Rebalancing -We engage in a process called Rebalancing, which, for once in the world of finance-eze, is exactly what it sounds like. If we determine together that you may be best equipped to meet your short and long-term goals with 60% of your portfolio invested in stocks and 40% invested into bonds, we create the initial portfolio.

Invariably the very next day, the market prices change, and all of a sudden, or over a few weeks or months perhaps, you see that your portfolio is now 64% stocks and only 36% bonds, for example. What to do? Well, we have two choices, of course. The first choice is that we do nothing, the second choice is that we sell off the extra 4% in this example; i.e., the excess of the current percentage allocation over that of the original 60% position, and invest it where? Into the 36% bond position. Granted the initial thought may seem incredulous, “What? Selling my winners to buy more losers?” Well, yes, in the short term, we are recommending just that.

However, if you believe like we do, in the ongoing market cycles, of upward trends and downward trends, then you accept the fact that what goes up must come down and what is down will most likely go up—the only mystery is the timing for these market movements.

We operate within certain bands of acceptable volatility within each particular type of assets—called Asset Classes. And only when the price movement exceeds those bands, do we consider trading, all the while taking trading and income tax costs into consideration. In other words, we analyze the veracity of trading, we aren’t subjecting your portfolio to automated, robot-driven trades.

History has shown us that the mathematics of rebalancing adds value to investors portfolios; so that’s why we do it.