At FirsTrust, our investment management processes are overseen by Chief Investment Officer Christopher Cannon, CFA; a Chartered Financial Analyst whose decades of competence and experience are baked into every portfolio we manage.
The Investment Management Process
1 ASSESS GOALS AND RISK
Investment risk should never be determined by a rule-of-thumb, your age, or a "scale from 1-5".
The journey to reach your specific financial objectives is like taking a road trip.
If you choose the wrong vehicle, take the wrong road or drive the wrong speed, you'll be significantly less likely to arrive where you want to be - when you want to be there.
Optimize Your Vehicle Optimize Your Route Optimize Your Speed
Using a scientific framework that won the Nobel Prize in Economic Sciences, we are able to engineer a portfolio to fit your unique risk preferences and meet your investment expectations with a 95% mathematical confidence.
How risky is your portfolio?
Watch this 83-second video.
2 CREATE YOUR INVESTMENT POLICY STATEMENT (IPS)
Do you have an investment discipline in place that lets you sleep at night?
Next, we will document the process of achieving your investment objectives with a written Investment Policy Statement, and establish your accounts at a major institutional custodian where we can implement your IPS. You may select Charles Schwab & Co., Inc. or another brokerage firm to custody your assets and effect transactions on your account.*
With your input and goals in mind, we will draft your IPS to spell out how investment decisions will be made for your portfolio including return expectations, income requirements, risk tolerances, and time horizons, all tempered with any other criteria important to you as we set out to achieve your financial objectives. This process is ongoing and evolves as your circumstances change.
Clients often come to us with relatively suitable investments but a disproportionate exposure to risk. In these cases, we seek to realign the portfolio without selling everything, paying the taxes and starting all over again.
We know that taxes can be a tremendous drag on a portfolio's total return, and employing strategies to reduce them can produce better net returns without incurring additional risk.
We know many financial products are burdened with ambiguous fees and unnecessary expenses buried in the fine print of confusing disclaimers. Reducing or eliminating these costs is another effective way to save our clients money.
3 STRUCTURE YOUR PORTFOLIO
Are you paying a fee just to be lumped into a one-size-fits-all model portfolio?
Each client’s investment portfolio is crafted from the knowledge and expertise of our collaborative Investment Committee along with some of the leading portfolio managers from around the world.
Large institutions will often scale their operations by generalizing consumers into model portfolios. This may allow them to become large and profitable with minimal effort, but we don't believe it delivers much value.
At FirsTrust, each portfolio is different, depending upon the client's personal objectives and the existing components of their investment accounts. With a hierarchy of your goals, respective timelines and risk tolerances, we have the framework for selecting investments and allocating capital to each objective.
As truly independent wealth managers, we can evaluate and select investments from anywhere - not just a menu of choices that favor the shareholders of a financial institution.
As true fiduciaries, we can guarantee the impartiality and objectivity of our investment opinions. We know the widest selection of the world's best performing investments is rarely ever found at the local bank or brokerage. As a truly independent firm, we are free to evaluate investments across the globe to find the most appropriate components for each client's portfolio.
The blended perspectives, approaches and backgrounds of our collaborative Investment Committee decisively minimizes the shortcomings of any single investment approach or analytical tool. The Investment Committee endeavors to continually distill our best ideas and practices from the implementation strategies down to the asset classes and ultimately to the specific investment selections for the benefit of all our clients. Each of our Advisors is then empowered to make the granular decisions given each client's unique mix of goals and circumstances.
The process of discovering your asset allocation framework is ultimately intended to maximize the probability of achieving your specific goals. No single approach to asset allocation is appropriate for everyone. Your mix of taxable vs. tax-deferred investments, asset classes, amount of funds and cost basis is different from other investors, so your asset allocation strategy should be too.
Among the most valuable - and overlooked - investment tax strategies:
Strategic Asset Location
Once your portfolio’s asset allocation is determined, we seek to improve its tax-efficiency by optimizing the “asset location”: holding more of the income-producing investments inside of retirement accounts to defer the annual income tax bite, and holding growth-oriented investments in taxable accounts where capital-gains tax rates may be timed and managed. This asset-location strategy also considers taxes on your future spending and any portfolio transitions. By strategically evaluating the "big picture," we can often add significant value without taking additional risk simply by strategically placing assets where various tax drags can be reduced.
4 MONITOR & REPORT
Does your investment firm keep you fully informed?
Comprehensive, accurate data leads to more fully informed decision-making, and collaborating with clients on a regular basis is the only way we know how to do it.
We routinely meet and/or teleconference with clients every quarter, provide consolidated quarterly reports, review progress toward meeting your goals, and evaluate risk levels.
One important analytical calculation we perform on a regular basis is called a STRESS TEST; a present-value vs. future-value assessment of your investments given various what-if scenarios.
FirsTrust also provides you with your own Personal Financial Website with cutting-edge technologies to collect data from all of your investment holdings, wherever they may be held, aggregate that data into one centralized management system, and provide you with 24/7 access from a single web-dashboard.
5 REVIEW AND ADJUST PORTFOLIO
Who is watching over your investments?
The Chartered Financial Analyst (CFA) is the most prestigious and highly regarded designation in the global financial and investment community. Charterholders apply their knowledge and skills in a wide variety of positions throughout the industry. They are mutual fund or hedge fund Managers, merger and acquisition specialists or accountants; and they are highly sought out by private wealth management firms to serve as Chief Investment Officers.
At FirsTrust, all investments are overseen by our Chief Investment Officer, Christopher Cannon; a Chartered Financial Analyst whose decades of competence and experience are baked into every portfolio we manage.
FirsTrust, LLC ("FirsTrust") is a federally (SEC) registered investment advisor (RIA) located in Florida. Registration does not imply an endorsement by the SEC.
* These materials have been independently produced by FirsTrust; we are independent of, and have no affiliation with, Charles Schwab & Co., Inc. or any of its affiliates (“Schwab”). Schwab is a registered broker-dealer and member SIPC. Schwab has not created, supplied, licensed, endorsed, or otherwise sanctioned these materials nor has Schwab independently verified any of the information in them. FirsTrust provides you with investment advice, while Schwab maintains custody of your assets in a brokerage account and will effect transactions for your account on our instruction.
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