At Bourke Wealth Management, Investment Consulting is at the center of our wealth management relationships. Investment Consulting is the process of selecting the specific holdings in a portfolio. While each relationship is unique and will dictate specific needs, we continuously monitor the following:
1) Asset allocation – The investment strategy that attempts to balance risk and reward by adjusting the percentage of each asset class (e.g. US stocks, foreign stocks, bonds, cash). This has been shown to be an important predictor of investment performance.
2) Investment Policy Statement – The document that specifies the appropriate asset allocation for each account.
3) Portfolio returns – While of significant importance, portfolio returns are just one part of the over evaluation of a portfolio.
4) Portfolio risk – Generally thought of as volatility, portfolio risk requires significant attention and effort to mitigate potential risk. The risk taken should be commensurate with the returns earned.
5) Impact of costs – Investment expenses are usually charged inside the investment, which directly reduces return. Therefore, we seek to minimize investment costs to the greatest extent possible.
6) Impact of taxes – One of the top goals for most retirees is to make their money last a lifetime, and taxation is one primary obstacle.
7) Impact of inflation – Another primary obstacle for making your money last a lifetime, inflation has the potential to reduce one’s ability to afford their lifestyle through retirement.
8) Appropriate use of Socially Responsible investments – These investments seek to only invest in companies that adhere to certain social standards.
Case Study
A 78 year-old single retiree came into our office with a $2.8 million portfolio. Living primarily off her investments, she wanted to invest her portfolio conservatively. After reviewing the individual investments and her portfolio as a whole, we determined that her portfolio was invested far more aggressively than she believed or wanted, and was paying internal fees greater than 2% in addition to the advisory fee she paid her advisor. Our goal was to reduce her internal fees significantly and adjust her asset allocation to better fit her risk tolerance and financial situation. In addition, we worked towards using more tax-advantaged assets in an effort to help her minimize her tax burden.
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The hypothetical example above is for illustrative purposes and is not representative of any actual experience. Individual results will vary.