As our FIDUCIARY PROCESS MATTERS® slogan strives to convey, we try to enhance the investment results of our clients by employing an investment fiduciary process as we work together. That fiduciary process is based on a set of investment Prudent Practices® developed by the Center for Fiduciary Studies™ and reviewed by the American Institute of Certified Public Accounts (AICPA®).
Atlanta Wealth Management’s investment process includes:
Asset Class Selection
We select the asset classes we believe are best to include in the portfolios we design—cash, large U.S. stocks, and bonds are examples of asset classes, but there are many. Our latest portfolio recommendations include up to nearly a dozen asset classes. The asset classes selected for your portfolio need to be consistent with its time horizon and risk and return objectives. They also need to be consistent with the implementation and monitoring constraints described in your Investment Policy Statement.
Asset Allocation Portfolio Model Design
This is how we choose the percentage of each asset class to include in your portfolio. We employ a portfolio optimization tool to identify nearly fifty efficient portfolios—those that seek to deliver the highest return for a given level of risk for the asset classes considered. Then we select the eleven efficient portfolios that combine the selected asset classes in a way that we believe most closely align with the risk groups used in our risk assessment tool. These are the eleven portfolios that we recommend you choose from to help you achieve your financial goals as you develop your financial plan, and then later include in your Investment Policy Statement.
This is how we choose each of your portfolio’s new investments. We limit our investment universe to mutual funds and exchange traded funds (ETFs). Each quarter, we make our first cut starting with the thousands of funds available to you, using criteria described in detail in your Investment Policy Statement. These criteria cover such things as fund composition, performance relative to peers, manager tenure, and expenses. This methodology is designed to conform to the Prudent Practices developed by the Center for Fiduciary Studies. Then we use additional factors to cull the first-cut investments. Investments making the final cut are placed on a “Recommended List” from which we choose new investments for your portfolio.
Investment Monitoring and Retention or Replacement
In many ways, the decision to select an investment is easier than deciding when to replace it. Each quarter, we review all your portfolio holdings using a methodology similar to Investment Selection, and also detailed in your Investment Policy Statement. Investments with significant shortfalls are sold. Investments with fewer shortfalls are placed on a watch list and reevaluated quarterly. Often, patience is rewarded because the shortfalls become less serious in the following quarters, and the investment can be removed from the watch list. Other watch list investments, however, don’t show improvement and are replaced in subsequent quarters.
As the values of different asset classes ebb and flow with the market, some asset classes become overweighted in your portfolio, while others become underweighted. So, we follow the procedures described in your Investment Policy Statement to sell overrepresented assets and buy the underrepresented. An additional benefit of this discipline is that it causes you to “buy low and sell high,” rather than selling low and buying high when market emotions run high.
We report your portfolio’s performance results quarterly, using the asset class benchmarks and total portfolio benchmark prescribed in your Investment Policy Statement. You also receive monthly statements from your custodian.