Conservative Investing Requires Care and Planning

Conservative Investors Pursue Safety

Most of the investors we work with describe themselves as “conservative.” If you agree with that assessment, you likely use it to express your feeling that it’s better to be safe than greedy in pursuing wealth. Care in selecting proper investments supersedes any attempt at market beating returns. Wealth preservation, in the form of spending power conservation, becomes the primary goal.

UPIA is a Guide for Conservative Investors

Academic and practical research over the last century has produced a body of knowledge that institutions use to deliver returns with safety. Such institutions include insurance companies, pensions and large trusts. These organizations have the responsibility to care for hundreds or thousands of beneficiaries by delivering steady income over long periods of time. You can use the same methods in your own portfolio. The rules and guidelines for the process have been codified in the Uniform Prudent Investor Act (UPIA) which is the legal standard for handling family wealth and small trusts. You can expect the highest level of service from your advisors if you treat your own retirement nest egg as if it were a trust.  In order to observe such care and to honor the wishes of a conservative investor, we have developed a methodology for financial planning not usually available to individuals.

3 Layers of Portfolio Management

You may choose a very high level of service and management that delivers three distinct layers of management when placing your money in the capital markets:

The first line experts choose the stocks in which to invest according to an Investment Policy Statement (IPS) that allows us to categorize their funds according to style (Large Cap, Small Cap, etc.). Within each of the fund styles, individual managers have the responsibility to diversify and monitor their own performance. Most individuals make the mistake of choosing funds based on performance reporting by companies such as Morningstar and Lipper.

The second line of managers are Certified Financial Analysts. They monitor performance according to AIMR standards and make sure that costs and fees are reported correctly as well. This management level is responsible for determining if there is excess return over the correctly attributed index, and whether any excess is due to luck or manager skill.

The Institutional Advantage

Porter Kickham monitors and maintains due diligence on the level 2 managers and provides a third layer of management by assigning assets to 13 different sub asset classes designed to exhibit covariance and to capture Equity Risk Premium across the globe.

These steps effectively eliminate some of the most common and most insidious obstacles to success when pursuing financial independence. When you consult with us, we’ll provide you with a plan that allows you to compare your choices with a variety of advisor services which include index investing with fee-only compensation.