What Windham is doing

Windham Global Solutions, the portfolio and risk management experts, is an essential provider for Osbon Capital.  Windham held its second annual investment conference last week in downtown Boston.  What happens when you put savvy Windham people in a room for two days with several dozen clients?  Lots of interesting discussion and debate about how to translate financial theory into best practices.  And some insightful advice.

The science behind your portfolio

Pretty much any investment advisor you talk to will promise you a “customized portfolio” – one that’s based on your financial needs and tolerance for risk. But where’s that custom portfolio come from? What’s the basis for the chosen asset allocation and the specific securities in the portfolio? Is it based on the advisor’s best guess, guidelines from headquarters, rules of thumb, or what?

At Osbon Capital, portfolios are built using the highly sophisticated software tools of Boston-based investment technology provider and consultant Windham Global Solutions. In my view, Windham’s technology is the best of the best.  They also publish valuable guidance, like Rules of Prudence for Individual Investors.

I use Windham tools to analyze the existing portfolios of prospective clients, quantify investor goals, develop new asset allocations, manage risk, model cash flow in and out, plan for different scenarios, choose ETFs, control costs, and run simulations to determine the likelihood of meeting client goals with different investment choices. In addition, Windham lets me easily “stress-test” portfolios with its proprietary Turbulence Index – modeling how they are likely to behave in periods of extreme volatility.

This stress-test capability is very important as we need to know what to expect from a given asset allocation not just when markets are performing in line with their normal historical tendencies, but also when economic or political events cause short-term, but major, deviations from historical patterns.

Insight, not insider deals

The net result of all of Windham’s technology is portfolio customization based on science – not on hunch, habit, or hype. As Windham sells no securities, all advice is objective and unconstrained by any deals with investment providers.

Further, the extensive graphics-rich reports and proposals generated by Windham software help me show Osbon Capital clients how their portfolios are constructed and how they are expected to perform.

Windham’s client conference, titled “New Perspectives on Risk,” took place at the Taj Boston Hotel on September 5^th and 6^th. It was a great opportunity for me to absorb some of the wisdom of the Windham team, take part in software workshops, and learn from the experiences of other advisors to make the most of Windham tools.