Having experienced concentration risk in our own portfolios, our advisors are well-versed in strategies to hedge this risk. Our goal is not to maximize expected return (which brings with it higher volatility), but rather to maximize the clients’ odds of reaching their goals. This focus on correlations, variability and outcomes stands in contrast to more product-oriented philosophies that fixate on backward-looking returns.
Effectively implementing this philosophy requires a unique skill-set, process and service offering:
- An understanding of stock-option/RSU plans and the analytical skill to adequately account for their impact on portfolios.
- A view across all client assets, not simply the portfolio we are managing, to ensure overall client risk levels are managed.
- A statistically rigorous long-term planning model so we can adequately project the impact that various choices will have on the clients’ odds of reaching their goals.
- An ability to incorporate tax and estate planning into the portfolio construction and monitoring process.