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Newsletter

2018 4th Edition (Other Editions)

RESPONSIBILITY OF CLIENTS

• Understand their own interests and objectives
• Understand the basic nature of investments
• Have the discipline to maintain basic policies
• Stay focused on the long term objectives

Before placing your holdings of securities under the supervision of a Portfolio Manager, it is a good idea to review the nature of such a relationship. If you choose not to use professional client advisor management, you should recognize that you are the portfolio manager of your investments. The items in this list are the responsibilities of the Portfolio Manager:

RESPONSIBILITY OF PORTFOLIO MANAGERS

• Understand the client's needs and listen to what the client states, relative to what the client means (semantics)
• Define realistic investment objectives that can meet the client's needs - based on agreed upon definitions
• Establish the right mixture of assets
• Develop well-reasoned, sensible investment policies designed to achieve the client's realistic and specified long term investment objectives
• Revise the portfolio to respond to changes in the marketplace and in the securities within the portfolio
• Coordinate cash flow planning, estate planning, and risk/reward planning
• Revise the portfolio in response to changes in the client's objectives or financial circumstances

ESTABLISH INVESTMENT ATTRIBUTES AND UNDERSTAND ASSET PERFORMANCE IN VARYING ECONOMIC SCENARIOS

• Safety of principal
• Safety of income
• Safety of purchasing power
• Appreciation potential
• Consider the risk of portfolio depreciation

AVOID INVESTMENT MIS-MATCH BY ESTABLISHING INVESTMENT POLICIES AND PROCEDURES

Evaluating an investment manager's policies:

• Market timer
• Has special knowledge or expertise
• Plays specific stocks or groups
• Undertakes variable strategies
• Has an insightful long term philosophy

Real target: what is right for client, not "beat the market"

• Client should define his or her emotional reactions to the inevitable short term volatility of the financial markets
• Client should define his or her need for long term policies to achieve long term objectives or short term policies to cope with short term needs
• How to take advantage of the strongest lever an investor can have - time
• Determine timeframe against which an investor should measure the worth of his investment policy, and what rate of return should be expected
• Do not get caught up in the bullishness or bearishness of the moment, as the basis for making decisions

WHAT TO LOOK FOR IN AN INVESTMENT

• Manager capability and experience
• Cost sharing arrangement
• Structure of investment and what flexibility is offered
• Substance, not pretty pictures, promises or endorsements
• How the investment will react to economic changes over time
• How it will be valued in the future

MAKE A SPECIFIC MODEL AND IMPLEMENT IT TO THE CLIENT'S SATISFACTION BASED ON ALL THE ABOVE

MONITOR ONGOING RESULTS TO THE CLIENT'S GOALS

• Establish an office procedure for inputting data
• Understand the reports
• Coordinate the portfolio with other software to project tax, cash flow, and financial statement growth
• Compare performance to original expectations
• Compare performance to standard indices
• Evaluate the portfolio in light of client's current needs and objectives
• Evaluate investments in light of the future outlook for the economy and the investment

CHANGES, REPOSITIONING, AND REINFORCING RETURN

• Maintain investment flexibility
• Evaluate client's needs and objectives periodically