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 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- Consolidating or shutting down out of date accounts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 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.
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?
delivered to your inbox
This communication may include forward-looking statements. All statements other than statements of historical fact are forward-looking statements (including words such as “believe,” “estimate,” “anticipate,” “may,” “will,” “should,” and “expect”). Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Various factors could cause actual results or performance to differ materially from those discussed in such forward-looking statements.”
“Historical performance is not indicative of future results. The investment return will fluctuate with market conditions.
Past performance is not indicative of any specific investment or future results. Views regarding the economy, securities markets or other specialized areas, like all predictors of future events, cannot be guaranteed to be accurate and may result in economic loss to the investor.
Investment strategies, philosophies, allocations and holdings are subject to change without prior notice.
This communication is intended to provide general information only and should not be construed as an offer of specifically tailored individualized advice.
While the Adviser believes the outside data sources cited to be credible, it has not independently verified the correctness of any of their inputs or calculations and, therefore, does not warranty the accuracy of any third-party sources or information.
Adviser does not endorse the statements, services or performance of any third-party vendor.
Unless stated otherwise, any mention of specific securities or investments is for hypothetical and illustrative purposes only. Adviser’s clients may or may not hold the securities discussed in their portfolios. Adviser makes no representations that any of the securities discussed have been or will be profitable.
Any IPO alerts are purely informational and should not be construed as recommendations to invest.
Adviser is not licensed to provide and does not provide legal, tax or accounting advice to clients. Advice of qualified counsel or accountant should be sought to address any specific situation requiring assistance from such licensed individuals.
Any case studies or hypothetical client profiles are for demonstration purposes only. They illustrate the breadth and depth of the many clients we represent at various life stages. Any similarities to actual Adviser’s clients past or present are strictly coincidental. Individual advice and results will vary based on each client’s circumstances, objectives and prevailing economic conditions.