Our Financial Planning Principles


Asset Class Risk Thermometer

Risk and reward go hand in hand. Cash in your pocket has no risk, but also no chance for additional return. An investment in a private business may be very rewarding financially, but has both concentration risk (all eggs in one basket) and liquidity risk (you can’t get your money out when you need it.)

We invest our clients in a range of asset classes to optimize the trade-off between return and risk. We will only invest our clients in assets such as stocks, bonds, mutual funds and ETF’s that are liquid (you can get your money out in 24-72 hours) and transparent (the current price is available from numerous sources.) Investments in real estate, private businesses, limited partnerships, private equity and hedge funds may offer the promise of higher returns with less risk, but those investments violate our rules about liquidity and transparency. We will not invest our clients in those asset classes. Watch a short video on this topic


Purpose Based Asset Allocation

Much of our work entails helping our clients divide their assets into different accounts with different purposes, and therefore different investment strategies. If the purpose of a pot of assets is retirement, and the client won’t be drawing on those assets for at least 5 years, then we can invest those assets in risky (volatile) securities like stocks and commodities. If the need is short-term, less than a year, then we can’t afford to take much risk at all and will invest those assets in securities like money markets and treasury bills that have virtually no principal risk.

The benefit to the client is that with assets segregated into separate account by purpose, the client doesn’t get overly concerned by short-term stock market setbacks because funds are clearly available for short term needs. Meanwhile, the client receives the benefit of the higher returns in riskier assets to ensure that money is there for future needs. Watch a short video on this topic


3 Bucket Retirement Income Strategy

Will I be able to retire ever? Answers to our clients' #1 question! Among the 30% of our clients who are retired and depending on their portfolio for retirement, no one has ever experienced a reduction in their monthly draw. We accomplish this by investing 60-70% of the client’s portfolio in higher returning but riskier (more volatile) assets such as US & International stocks, and commodities.

We rebalance once or twice a year, flowing excess balances in the risk bucket to the fixed income bucket, which is invested in lower returning but less volatile corporate & municipal bonds, and preferred stock. The excess in the bond bucket flows into the cash bucket, which is invested in low risk, low return assets such as money market securities. Each month, the client receives the exact same draw.

In general, we have a year’s worth of retirement income in the cash bucket, 4 years in the fixed income bucket, which means we can survive a 5 year “drought” in risk assets, which is exactly what happened during the 2007-2010 period of financial turmoil. Watch a short video on this topic