We have structured our business around several core principles as summarized below:
1. Always Act in the Client’s Best Interest
Our firm is a Registered Investment Advisory Firm. As such, we act in a fiduciary capacity, which requires the investment professional and firm to always act in the client’s best interests. A fiduciary is held to a higher standard of care than a non-fiduciary subject to the suitability standard.
2. Fee Based Compensation Structure
We are compensated based on a percentage of assets under management rather than by commissions. We do not sell high cost insurance products or mutual funds that pay us upfront commissions or ongoing fees. We believe this structure better aligns our interests with our client’s interests and eliminates the incentive for trade activity or product selection based on payout.
3. Control Costs
Over time, seemingly minor differences in cost can have a significant impact on asset values. We avoid high cost mutual funds and insurance products, and focus on individual securities and low cost mutual funds in an effort to reduce the costs to the client.
We do our own research and make the investment decisions locally. We do not outsource the investment process and decisions to a third party investment manager. Our clients like the fact that they can talk to the people making the day to day decisions in their portfolio.
5. Keep It Simple
In our opinion, our industry has made the investment process more complex than it needs to be. We follow a very basic approach to investing that focuses on quality (balance sheet strength), current income (dividend yields), cash flow, and valuation. We take a long term view, do not focus on quarter to quarter performance, and believe in patient investing.
6. We Invest Where You Invest
We believe in our investment process and invest our own money and family money into our program.
Security Selection Process
The majority of our clients have an investment objective of long-term growth and income and all share our long-term approach to investing. We focus our research and due diligence efforts on investment products designed to preserve principal, provide income via moderate risk, and offer growth potential over time.
Our process is designed to select high quality, dividend paying blue chip stocks in an effort to provide growth potential, inflation protection and income. We typically recommend between 20 and 30 different securities across broad economic sectors. These securities are reviewed by our investment committee prior to their use and are carefully monitored once they have been selected in order to ensure that their underlying soundness and investment objectives are consistent with our investment philosophy.
Characteristics that we look for in the companies in which we invest:
Strong balance sheet
Long history of earnings
Sound Management teams
This is the portion of your portfolio designed to provide stability and income. Our goal is to structure high quality fixed-income portfolios that produce an attractive income stream with low volatility. As with all investments, there is no guarantee against loss, but we think it is important to include bonds and other wealth-preserving securities in our Client Portfolios. From a historical perspective, such investments have demonstrated a more consistent return than stocks.
We select fixed-income products after performing an analysis of credit risk, interest rate risk, and structure risk. Some of the investments we suggest to clients are:
Government agency securities
Certificates of Deposit
Investment grade corporate securities
We use low-cost mutual funds where needed (funds with low operating costs and low management fees) when designing a well-diversified portfolio, using both stock and bond mutual funds.
The items above map up the “core” of our investment portfolios. Depending on current market conditions, these items may be supplemented with other investment products in order to address the prevailing investment environment.
In order for us to develop a financial strategy that best serves your needs, we request the opportunity to meet with you and discuss your financial goals.
During our discussion, we will ask about your investment history, risk tolerance, and your current and future financial needs. Obtaining this information allows us to help you formulate an investment path.
Defining these items is crucial to our relationship, so we will revisit these goals periodically via a series of checks and balances. Some specific steps in our relationship building process are:
An in-depth discovery process allows us to understand and define your objectives while we learn more about “you”, the client.
We will create a plan that helps you manage risk and keep your portfolio in line with your goals. You will complete a risk evaluation survey that will assist us in determining the right product allocation for your financial needs.
We will meet periodically to discuss your portfolio to determine if any adjustments need to take place due to any changes in your investment circumstances.
We monitor and evaluate performance on an on-going basis and communicate these results relative to your determined financial goals.