Client Portals

Routine, Complex and Innovative Investment Management3 min read

The three tiers of managing wealth

Feb 4, 2020 - Max Osbon ( 5 mins to read)

Max Osbon

Let’s take a break from politics and global health to talk about your portfolio management. There are three necessary components of your investment management. You’re familiar with the first part, all of the routine tasks typically associated with investing. Eventually there’s a need for the second element, where advanced analysis kicks in. Forward-looking and innovation-based activities comprise the third piece. All three are important. Here’s a deeper look.

Routine

Routine investment management (IM) is the unconscious nervous system of your portfolio. Routine IM takes care of all trading without mistakes. Robust technology is necessary and so is extensive human attention and experience. At Osbon Capital we use a second set of eyes on money movement and trades and have not had an error in fifteen years.

Routine IM also addresses:

  • Reinvesting dividends
  • Moving money between accounts
  • Making required minimum distributions
  • Maximizing retirement account contributions
  • Opening new accounts as needed
  • Consolidating or shutting down out of date accounts
  • Other routine account management tasks

The importance of a reliable team to execute routine tasks and transactions cannot be overstated. Even though investors can build in all kinds of safeguards and notifications, details are missed and mistakes still happen. Osbon Capital prides itself on paying exceptional attention to detail and client service so Routine IM is just that: routine and nearly invisible.

Complex

Complex investment management represents the next level for investors. Complex IM starts with asset allocation. Complex IM also addresses uncertainty and risk, which are two distinct portfolio characteristics. Uncertainty looks at the impact on your assets if “something” does or doesn’t happen. Risk focuses on what return you will get if you are willing to take chances.

Complex IM also involves specific in-depth research. The subject might be a security, an asset class, a manager or something else. In-depth research is a necessity before making any important investment decision. We have three experts at Osbon Capital to do this research.

Trusts are also designed and implemented in Complex IM.

Innovative

With Innovative IM you are now taking advantage of every possible technique for wealth preservation and growth, for this generation and future ones. Innovative IM addresses complex tax planning, multi-generational use of trusts and insurance to pay taxes. It also identifies and executes on investment decisions that will compound for years. Riskier strategic investments and human capital investments come into the picture with greater clarity. Frequently, charity and legacy planning take a big percentage of future assets and thus merit considerable attention in Innovative IM.

This phase is a type of investment nirvana because you will always have plenty of money and you can also give a lot of money away even under a sustained negative market environment. However it is complicated, with lots of moving parts. As such it demands an experienced team that has been through the long-term process multiple times, through a variety of market conditions.

Progressing through the phases

You can engage in routine investment management as soon as you have a job and free cash flow. You don’t necessarily need a money manager for Routine IM especially if the asset size is smaller. Complex IM becomes necessary when portfolios reach into the millions and career and family situations get more complicated. At this stage there are public and private investments and significant human capital. Innovative IM is a necessity as the numbers get even larger and the investor starts to focus on future generations and philanthropy.

We practice all three types of investment management with an emphasis on getting all clients to the innovative level. Where are you on this journey and how can we help you move forward?

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