Step One: Matching Investment Strategy and Expectations
GGM Wealth Advisors’ process begins with a look at where your investments are today, and where you think they are. Often, perception does not match the reality of your current investment situation. You might feel that you are conservatively invested, while your portfolio is filled with more aggressive holdings, or vice versa. Every step in our process is designed to create a match between your investment needs, objectives, expectations, and our recommendations.
Step Two: Understanding Your Goals and Preferences
Once we understand where your portfolio is today, we spend time with you learning about your goals, emergency cash needs, and comfort level with various types of investments. We also start to familiarize you with our preferred investment vehicles, including mutual funds, indexes, and exchange-traded funds, demonstrating how they provide access to virtually every type of investment market.
Step Three: Avoiding Wild Roller Coaster Rides
In 1990, the Nobel Prize for economics was awarded for research that revealed a unique relationship among investment risk, reward, and diversification. Known as “Modern Portfolio Theory,” this research forms an integral part of our investment approach. By actively managing the exposure to domestic and international market capitalization (large cap, mid cap, and small cap), investment style (growth vs. value) and market sectors (financial, health care, technology, etc.), we optimize performance while adhering to the risk parameters established for each client.
If you think of investing as a roller coaster ride — and it often can be — the application of a diversified strategy utilizing the basic tenets of Modern Portfolio Theory combined with our dynamic and tactical risk model can moderate the effects of sudden and dizzying drops in the market. This is particularly critical for clients who are retired, or who are nearing retirement.
Step Four: Designing the Strategy
We apply the principles of diversification in the design stage by selecting an appropriate mix of asset classes based on the level of safety required. This is the most critical step in our investment process. Numerous academic studies have demonstrated that over 90 percent of a portfolio’s total return is determined by “category” decisions while less than 5 percent comes from individual security selection.
GGM uses no preset formulas or asset allocation mixes. In order to be fully responsive to your needs, we focus on establishing a strategy for your portfolio, controlling its level of risk, and matching a diversified investment strategy with your expectations. Investment strategies for our clients are implemented using a combination of mutual funds, indexes, and exchange-traded funds, along with individual taxable and tax-exempt bonds.
By integrating tax planning with investment asset allocation, we can optimize retirement cash flow by properly structuring the combination of IRA distributions and other investment income. Charitable giving can also be designed to meet the goals of both the donor and the recipient.
Step Five: Implementing the Process
With the portfolio strategy and asset mix firmly in place, we seek to maximize the potential return of the portfolio through the careful selection of top-performing no-load mutual funds and exchange-traded funds (ETFs) that match your goals. Why no-load funds and ETFs? For several reasons.
First, no-load funds and ETFs are highly liquid and readily available to investors while covering the full spectrum of asset categories. (For those specific strategies not available in the mutual fund or ETF universe, we occasionally utilize the closed-end fund sector.) Second, they can be purchased objectively and independently without the bias of commissions. This assures clients that our decisions are based on each fund’s merits and not our compensation.
In selecting individual funds, we monitor a database of more than 7,600 mutual funds. We “grade” each potential fund on a number of quantitative and qualitative measures, including risk, investment style, operating expenses, size, and current and historical rates of return. Only those high-performance funds that offer the potential for continued superior performance are selected.
The implementation of the fixed-income (bond) strategy is again individually customized to optimize the after-tax return and meet ongoing cash flow needs. Using its institutional capabilities, GGM Wealth Advisors buys “dealer direct,” passing through its “wholesale” cost to client portfolios. Individual bond holdings are limited to AAA-rated government agency/mortgage-backed securities or AAA/AA-rated municipal bonds as dictated by the tax bracket of each client. Diversified funds are utilized for higher risk categories such as high-yield or emerging market debt.
Step Six: Managing the Portfolio
GGM Wealth Advisors’ process is dynamic and ongoing. Our team continually monitors funds by considering market conditions, looking for any changes in management or investment style, and reviewing a host of qualitative and quantitative factors. Because we know that your circumstances and objectives are ever-changing, we pride ourselves in maintaining effective, ongoing communication to stay abreast of any new developments. We strive to adapt your investment portfolio to ensure that it continually matches your current situation.
We recognize that each client’s needs, constraints, preferences, and goals are unique. To accommodate this diversity, we strive to tailor our services and advice for you, based upon needs and circumstances as determined at the time of the initial engagement and as modified from time to time.
Our investment advisory services may include:
- Establishing investment objectives and goals in close collaboration with a client, taking into consideration the client’s needs/desires for a) long-term capital appreciation b) income/cash flow c) capital preservation and d) risk tolerance.
- Ongoing asset review and management
- Portfolio analysis and quarterly performance reporting.
- Coordinating with client’s legal, accounting, tax and other advisors. (We do not, however, provide legal, tax or fund accounting advice.)
- Advising employee benefit plan sponsors on structure, model allocations and investment vehicles.
- Providing asset allocation advice.
- Analyzing risk exposures. Ongoing availability for questions on investment markets and strategies.
The first step toward achieving your financial objectives is getting started.