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Mike created Clients First! to serve investment clients in
the manner they deserve: their interests come before
anything else.
What you get as a result: a
portfolio of investments tailored to meet your personal and
financial objectives. Based on your preferences, it will be
designed to limit downside risks without overly limiting
long-term performance.
What you would have: an effective three-part
investment strategy.
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Asset Allocation. After establishing a
relationship, a balanced portfolio with appropriate
asset allocation is created. This reduces volatility
and reductions in value due to a down market. But
performance will not necessarily diminish as volatility
does. It depends on your preferences. For example, a
client may have a high tolerance for risk and want to be
aggressive with all of his or her funds, i.e., investing
everything in stocks. But adding bonds, even as only 10
percent of the portfolio, would have a dramatically
positive effect on a portfolio’s performance when
markets fall.
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Correlation of Assets. The second part is to
set up a good correlation of assets. This means
having assets in different types of investments.
Different investments move in different directions each
year. An obvious example is large cap stocks versus
mid-term treasuries. 2008 was a terrible year for large
cap stocks (big corporations). In contrast, treasuries
with about a 6 year term were the best performers in
2008 (according to the Wall Street Journal). But who
knew and who would have predicted it? So having the
right correlation of investments, given that picking the
winning category’s nearly impossible, is critical. That
way the portfolio benefits regardless of which assets
outperform the market in a given year.
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Tactical Allocation of Assets. Third,
allocate investments well tactically. With the right
expertise and software, the first two parts aren’t too
difficult. This part is the toughest. It means investing
more in different asset classes and sectors based on
which are most likely to perform best. So once the asset
allocation is suggested and the right correlation of
assets is recommended, the question becomes if there are
5 asset classes, for example, does each get 20 percent?
Often clients will already have stock index funds so
it’s partly a question of figuring out how to work with
what’s there so as not to have the client incur any
unnecessary costs from buying or selling or from the
related tax consequences. Will U.S. equities outperform
foreign stocks? After the tech bubble burst, the experts
Mike is learning about this approach from were pretty
sure (correct as it turned out) that small cap stocks
would perform better than the overall market as the
market improved. They had recommended that their clients
put more of their investment funds in small cap stocks
and less in other types of assets.
How you benefit: You would have an investment
approach you understand that is customized to meet your
needs. It would reduce your downside risk and increase the
likelihood that your investments will outperform the market.
Background. Mike’s exciting new direction is
consistent with his success as an expert in U.S. – Soviet
relations, international trade negotiations, and residential
and investment real estate. Each avocation has been
characterized by a burning passion, by driving to master
what’s most important, and by an intense desire to serve
others effectively. Initially he develops the necessary
expertise, then markets his services, earns testimonials and
positive performance statistics until a steady stream of
personal referrals results.
The formal training is a rigorous series of
six, three-month courses leading up to the daunting two-day
Certified Financial Planner (CFP®) exam. A relatively few
people nationwide qualify to sit for the exam. Earning a CFP
would help him guide clients as well as possible to meet
their investing and financial planning objectives.
Real world experience builds on the investment
experience he’s developed over the years. Right now, Mike is
actively investing in equities. More importantly, valuable
experience will most likely come from working with a nearby company
whose client-centered approach is outlined above (asset allocation,
correlation of assets, tactical recommendations). The objective is
to help clients meet their objectives without a transaction-driven
business. Establishing the fiduciary relationship, with appropriate
disclosures, gathering data, creating their financial plan, and then
implementing and monitoring it will serve clients best.
Certified
Financial Planner Board of Standards, Inc. owns the
certification marks CFP®,
Certified Financial Planner, and federally registered
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