The wealthier an individual, the more complex and time consuming the money management process becomes. It seems there are more sources of conflicting and confusing information on investing than ever before. Our involvement in the portfolio management process is designed to reduce our clients' stress level and produce a feeling of financial security. Unlike professional investors, most individual investors lack a clear process for the management of their net worth.
We seek to maintain or increase net worth over time, with the goal of enabling our clients to enjoy a secure retirement or financial independence. We use realistic assumptions in our planning exercises and acknowledge that future returns from capital markets may have a wide range of outcomes.
We feel there is a difference between the return on an investment and your return as an investor. At WMA, we strive to maximize your return as an investor. This means helping you develop a reasonable set of goals and objectives, preparing a personalized investment policy statement which outlines how your portfolio will be managed, and then adhering to that investment policy through all the gyrations of the financial markets. The process of investment management is so individualized that it should not be a commodity. We are neither "buy and hold" managers nor active traders, as we believe there is little benefit to be gained from market timing. Rather, we employ a disciplined approach known as "dynamic asset allocation". Under this system, we monitor a portfolio on a regular basis to stay informed as to how individual security holdings are performing, while taking steps to tune or rebalance the portfolio to align with the initial target allocation on a quarterly basis. In addition, we make tactical adjustments to capitalize on inefficiencies in the financial markets. This powerful discipline reduces the emotion inherent in the decision making process. By virtue of selling some assets in outperforming sectors and buying underperformers, this discipline enables us to follow the "buy low, sell high" adage. Applied over a long term investment horizon, 5 years or more, this philosophy can enhance returns and has been proven to reduce volatility.
Our steps for effective portfolio management are:
- Define investor objectives, constraints, and preferences
- Making a distinction between risk tolerance (the level of risk a client can withstand before liquidating assets), risk capacity (how much risk a client can afford to take) and risk need (how much risk clients must take to achieve their goals)
- Develop investment policy statement
- Design proper asset allocation, which is the single most important factor of investment performance and volatility
- Select the securities for the portfolio
- Monitor portfolio and adjust as needed
The essence of investment management is the management of risks, not the management of returns.
Investing is a 'loser’s game,' in which the winner is often the investor who makes the fewest errors.
NOTICE: Please remember to contact Wealth Management Advisors, Inc. if there are any changes in your personal and/or financial situation or investment objectives for the purpose of reviewing, evaluation, and/or revising our previous recommendations and/or services, or if you want to impose, add to, or modify any reasonable restrictions to our investment advisory services. A copy of our current written disclosure statement discussing our advisory services and fees continues to be available to you upon request. Past performance is no guarantee of future results.