You’d like to do a financial plan, but you want to work with more than a financial planner. You’d like advisors who understand the intricacies of planning, but who also understand the art and science of investing. You want more than just a pie chart allocating your assets among a hodgepodge of mutual funds.
The time had come for a couple in their mid-40’s to do a financial plan. They had been handling their own investments for years, and had accumulated over 20 different funds in various regular and retirement accounts. They confessed to having no idea
- What their actual asset allocation was,
- how well their funds had performed against a reasonable benchmark, and
- whether their funds fit together in a coherent way.
We first constructed a solid financial plan, led by the Certified Financial Planner on our team. At that point we looked at restructuring the couple’s accounts. We then consolidated their five traditional IRA’s into two: one for each of them. We did the same for their various regular taxable accounts.
We recommended simplifying their investments using two core stock models, one more growth-oriented in style, and one more value-oriented. The investment process for that model involved a hedging discipline which had reduced the strategy’s volatility, and we explained the workings of the hedging discipline in plain, comprehensible terms.
It was decided to use the growth-oriented model in the taxable accounts and the value-oriented model (which entailed more turnover) in the IRA’s to minimize capital gains tax.