At Collective Wealth Advisors, we are big advocates of client education. More educated clients have a better understanding of the why behind investment strategy recommendations and most importantly are more likely to remain disciplined with their investment strategy approach, which increases the likelihood of achieving the goals they set out to accomplish. While client education can happen over time, there are basic elements of a prudent approach that investors will want to understand. In this article we will discuss 9 foundational elements of a prudent investment philosophy:
1. Fiduciary Responsibility: Building Deep, Trust-Based Relationships
At the heart of our investment management philosophy lies a fiduciary commitment to our clients. We prioritize our clients’ interests, goals, and objectives above all else. This means every decision we make is solely aimed at benefiting our clients. By fostering open communication, we ensure that we fully understand each client’s unique circumstances. This deep understanding allows us to tailor our advice and strategies to fit their specific needs, leading to a more rewarding and long-term relationship built on trust. Trust is not just a buzzword—it’s a cornerstone of achieving better financial outcomes for our clients.
2. The Power of an Unbiased, Collaborative Process
We believe that the best investment decisions arise from collaboration among a team of experts. Our team comprises seasoned professionals with designations including CFA®, MBA, CFP®, AIF® and CIMA® who bring diverse perspectives and deep expertise. Supported by advanced technology and insights from third-party investment partners, our approach is not only collaborative but also process-driven. This unbiased, collective effort ensures that every investment decision is scrutinized from multiple angles, leading to outcomes that are in the best interest of our clients.
3. Strategic Asset Allocation: The Key to Managing Risk and Return
Asset allocation is a critical component of our investment strategy. We understand that the allocation of assets within a portfolio is the primary driver of both risk and return. By constructing a portfolio with genuinely diversified investments, we aim to reduce the impact of market volatility while increasing the likelihood of meeting our clients’ investment objectives. Each investment within the portfolio is carefully chosen for its role—whether it’s to foster growth, provide income, preserve capital, or hedge against inflation. This thoughtful allocation is designed to help clients navigate market fluctuations while staying on track toward their financial goals.
4. Embracing a Long-term Perspective
Our investment decisions are guided by a long-term fundamental outlook. This perspective helps clients avoid the pitfalls of short-term market fluctuations and emotional reactions, which can derail even the best-laid financial plans. By focusing on long-term strategies, we aim to reduce the risk of clients not meeting their goals. Moreover, this approach harnesses the power of compounding returns, enabling wealth generation over time. We believe that patience and discipline are key to successful investing.
5. Minimizing Investment Costs While Maximizing Value
Investment costs—such as fees, taxes, and other expenses—can significantly impact overall performance. We are committed to minimizing these costs for our clients. However, we also recognize the value that skilled managers can bring. Therefore, we blend active and passive strategies within our portfolios.
6. Expanding Horizons with Extensive Access to Unique Opportunities
One of the advantages of working with our firm is access to uncorrelated and nontraditional investment opportunities. These opportunities have the potential to provide strong absolute returns over a full market cycle. Our strategic partners provide us with access and analyze these unique investments, effectively offering our clients opportunities that might not be available elsewhere. By incorporating these alternative investments, we enhance portfolio diversification and seek to improve overall results.
7. The Importance of Ongoing Portfolio Maintenance
Maintaining a well-balanced, diversified portfolio requires continuous oversight and adjustments. We employ evidence-driven strategies such as portfolio rebalancing and tax-loss harvesting. These techniques help manage risk and can enhance returns while improving tax efficiency. By regularly reviewing and adjusting portfolios, we ensure they remain aligned with clients’ financial goals and risk tolerances.
8. Focus on What You Can Control
The financial markets are complex and influenced by numerous unpredictable factors. Rather than attempting to predict interest rates or government actions, we encourage clients to focus on controllable elements. This includes setting a thoughtful investment strategy, resisting the temptation to follow short-term trends, and adhering to a disciplined review process. By focusing on what can be controlled, clients can avoid common pitfalls such as panic selling and remain on track toward their long-term financial goals.
9. Changing Your Portfolio as Your Life Changes
Life is dynamic, and so are financial markets. Our approach recognizes the need for portfolios to evolve in response to new evidence-based research and life circumstances. Based on your circumstances, the likelihood you will be able to meet and exceed your goals may change. Whether it’s adjusting for new financial objectives or responding to shifts in risk appetite, we are committed to helping clients navigate these changes to maintain a healthy probability of future success.
This overview provides investors with key elements of a prudent investment management philosophy and how it aligns with their financial goals. Investments are an integral part of a broader financial plan and journey. Portfolio strategies and investment decisions can have a significant impact on one’s long-term success. We believe that an evidence-driven approach can deliver a better wealth management experience and increase the probability of a successful journey.
*Our strategic partner, Buckingham, and their Investment Policy Committee (IPC) supports CWA by developing and setting investment research protocols. The CWA team works in a collaborative approach with the IPC in building prudently diversified portfolios. The IPC determines, approves, reviews and documents all investment policy activities undertaken by Buckingham to meet both the current and future needs of investors and their advisors. Policy decisions made by the IPC are driven by the findings of academic and practitioner financial markets research not by personal opinions of committee members.
The information presented is for educational and informational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based upon third party information which may become outdated or otherwise superseded without notice. Third party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Diversification and implementing an investing strategy does not guarantee a profit or protect from a loss. All investing involves risk, including loss of principal.