“Let every man divide his money into three parts, and invest a third in land, a third in business, and a third, let him keep by him in reserve”  Talmud Jewish Texts, around 200 B.C.


High net worth families such as yours have typically accumulated sufficient wealth to maintain their lifestyle and leave assets to the next generation.  Under those circumstances, we understand that our mandate is to try to help you preserve and grow your overall wealth, of which your portfolio might be a modest component.  As a result, the core tenets of our investment philosophy are to:


Reduce controllable risk first

Unlike many people in our industry who attempt to maximize your portfolio returns once they understand your risk tolerance, we think our high net worth clients are better served by agreeing on a target rate of return, and asking their advisor to work at reducing the risk required to target that rate of return.   We focus first on the controllable factors that could be dangerous to your wealth: Do you have a cash reserve for a rainy day?  Did you lock in your mortgage or are you exposed to rising rates? Is your balance sheet sufficiently diversified or do you rely on only one source of income? Are your biggest assets too correlated and liable to suffer at the same time?


Use low-cost investments

Standard & Poor’s famously publishes an annual study (the SPIVA Report Card) showing that over the long run, active stock pickers have a low probability of doing better than their benchmark, especially in efficient markets like large US equities.  As a result, we prefer to invest in index funds and ETFs, which cost a fraction of what active mutual fund managers typically charge.  There are times when paying higher expense ratios can be justifiable, such as when investing in less liquid assets or when getting some income guarantee from insurance companies, and we will always articulate reasons for paying higher costs if this is our recommendation.


Maintain liquidity at all times

Liquidity is the lifeblood of a business and is similarly critical when it comes to your personal financial strategy.  One of the first steps we will take is to try and ensure that you have adequate cash reserves to weather a market downturn without needing to sell investments.  We will also endeavor to secure lines of credit against your real estate, business or portfolio, so that you have the dry powder necessary to make new investments in distressed assets when opportunities arise.