Our Approach to Investment Management

Foggy, Autumn trees and red wooden houses along river, Shelburne Falls, Massachusetts

"How will you manage my money?" is the question we hear most often from prospective clients.

Our top priority - always - is to act in your best interest. We do that by finding opportunities to help lower your costs, minimize your taxes, and simplify complex investment situations. Here’s how we strive to achieve those goals - and what you can expect when you work with the professionals of Raymond James:

Although every client is impacted by a distinct set of circumstances, creating a custom portfolio for every individual is ineffective in the long run. As a branch that manages over $130 million for 200+ clients, we have discovered that the best approach is to utilize investment models that help maintain and monitor an investment discipline in the portfolios. These systems allow us to quickly evaluate each investor’s portfolio allocation and risk at any given time.

We use seven investment models ranging from Growth (77% in stocks) to Preservation (20% in stocks). At the beginning of a relationship, we work closely with clients to identify the most appropriate model given their time horizon, risk tolerance and a variety of other factors. We then review the allocation at regular intervals and shift models as clients move through different planning stages (accumulation, pre-retirement, retirement, etc.) or as changes occur in the factors determining investment risk in their lives.
Within our models, we manage client assets using a combination of mutual funds, Exchange-Traded Funds (EFTs), individual stocks, bonds, private money managers, alternative investments and, in some cases, annuities.

Investors hire us to conduct the ongoing due diligence required to evaluate each of these options and to select the ones most appropriate for their situation. In order to do that, we spend a great deal of time participating in conference calls, attending meetings and seminars, and conferring with money managers. It is the nuances relating to investments - the things you won’t find in a Morningstar Report - that help us add value to your investment portfolios.
We seek to create a well-diversified portfolio for each client, one with exposure to a wide variety of asset classes. Within our stock investments, we diversify based on:

  • Market Capitalization – Small, mid and large cap stocks
  • Investment Style – Growth, value and blend
  • Geography – Domestic and international (further divided into developed and emerging markets)

In addition to equities, our models include the following assets classes:
  • Balanced – Portfolio managers at these World Allocation investments have more flexibility than style-specific ones to react to changing investment conditions and move money between asset classes.
  • Alternatives – We use global real estate and long-short investments to help reduce portfolio correlation with the stock market.
  • Bonds – We use bonds designed to reduce portfolio volatility and provide current income. We also use multi-sector bond investments to take advantage of potential opportunities within the fixed income universe (high yield vs. investment grade, domestic vs. international, government vs. corporate, etc.).

* There is no guarantee that any strategy or diversification will be successful nor protect against loss. Alternative investments involve specific risks that may be greater than those associated with traditional investments and may be offered only to clients who meet specific suitability requirements, including minimum net worth tests. Investments mentioned may not be suitable for everyone.

Our core portfolio is the mix of stocks and bonds we use to meet a client’s asset allocation target. To offer a simple example, let’s say that a particular investor has a 60/40 mix of stocks and bonds. This would normally account for 90% of their invested assets, spread over multiple accounts - both taxable and tax deferred. It’s important to note that, although we don’t seek to replicate the complete model in each portfolio, client accounts are set up to meet overall allocation targets.

We also have a tactical portfolio, which typically accounts for 10% of assets. In it, we seek to take advantage of potential market opportunities but also to hedge risk by moving to more conservative investments in times where we feel this is appropriate.
By selecting suitable investments for your tax-deferred (as opposed to taxable) accounts, we can design the structure of the overall portfolio to be both balanced and tax-efficient. Examples of tax-efficient investments used in taxable accounts include index investments and municipal bonds. We also review taxable accounts every calendar year to develop tax-planning strategies - such as harvesting unrealized losses to reduce taxes on future investment gains.
Gradually, well-performing asset categories will come to represent a larger percentage of your overall portfolio than originally planned - which can increase your overall risk. To counteract this, we periodically rebalance our discretionary client portfolios to bring investments back to the target allocation and to assure that portfolios remain well diversified. Any rebalancing of your portfolio is done in a way that's designed to minimize taxes and transaction costs.
At their request, we often advise clients on suggested allocations and appropriate funds for 401(k) accounts, which are administered by their employers. As individual investors, they can then make the changes themselves on their plan’s website.

Upon retirement, clients can roll over their 401(k) accounts to IRA accounts, to provide more flexibility in managing their investments as part of the overall portfolio.

In addition to rolling over your 401(k) to an IRA, there are other options. Here is a brief look at all your choices. For additional information and what is suitable for your particular situation, please consult us.

▪ Leave money in your former employer’s plan, if permitted
Pro: May like the investments offered in the plan and may not have a fee for leaving it in the plan. Not a taxable event.

▪ Roll over the assets to your new employer’s plan, if one is available and it is permitted.
Pro: Keeping it all together and larger sum of money working for you, not a taxable event
Con: Not all employer plans accept rollovers.

▪ Rollover to an IRA
Pro: Likely more investment options, not a taxable event, consolidating accounts and locations
Con: usually fee involved, potential termination fees

▪ Cash out the account
Con: A taxable event, loss of investing potential. Costly for young individuals under 59½; there is a penalty of 10% in addition to income taxes.