Asset Management
Investment Process
Our approach to investing is based on identifying
the clients’ needs before any investment decisions are made. This
process begins when you, the client, are asked to define your financial
goals. It moves on to consider what level of risk is comfortable
for you and the time frames for meeting financial goals. If your
goals, risk tolerance and time frames are established at the start
of an investment program, the likelihood that your investing will
help you work toward your goals is greatly enhanced.
Profile
During
the asset allocation profile stage
we ascertain what your goals are. This is the most important step
in implementing a custom tailored strategy for your situation. By
developing a “game plan” at the beginning it will allow us to focus
on the goals and arrange a portfolio that will work toward obtaining
those goals. Allocation of Assets
Allocation of
Assets
Asset allocation
is the most important factor in how your investments will perform
over the long run. It has been discovered by Brinson, Singer
& Beebower (1991) that over all other factors that determine your
investment returns, asset allocation is by far the most important.
This study determined that asset allocation accounted for 91.5%
in determining your investment returns. Traditionally accepted determining
factors such as market-timing, stock allocation, and outside forces
only accounted for 8.5%. This shows with out a well selected
asset allocation you will greatly inhibit your future returns.
At West
Financial we greatly stress the importance of your asset allocation.
The first step in asset allocation is determining your tolerance
for risk. This is a measure of how much risk you are willing to
accept. With any investment, the higher amount of risk you are willing
to accept, the greater potential for higher returns. With
increased risk there is also a greater chance for loss.
By determining your risk tolerance we can tailor
the asset allocation to your goals to obtain the highest possible
return in the future. After your risk tolerance is determined, we
will structure the portfolio so that it will produce the highest
possible return relative to the amount of risk accepted.
Investment Selection
The third
step is to select investments that will be in your portfolio. This
is a very involved process. It is not a simple process of just selecting
the best performing investments for your
asset allocation. A manager with high performance at this
moment still may not be the best fit for your situation due to increased
risk or a poor track record for consistent returns over the long
run.
West Financial
is an independent investment advisor. This means that we have an
open architecture platform in regards to investment selection. Essentially,
this means that we are not bound to use proprietor managers or restricted
in any way with the managers that we can use.
We select
your investments only after they meet stringent company standards.
We look at various aspects of the investments such as risk, past
and projected earnings, correlation, fund manager tenure, and many
other standards even before considering to use them in your portfolio.
Manager Review
The final step in our asset
management process is portfolio review. The manager review is a
continuous process where we are constantly monitoring our clients
portfolios to ensure they are meeting our strict standards.
We believe that this is
the one area that sets our firm ahead of the pack. We perform an
analysis of our clients portfolios on a monthly basis. We
check if the managers are in the top of their peer group and outperforming
their respective benchmarks. Along with this constant performance
analysis we also monitor the major factors of the investments health
such as manager tenure.
We conduct an extensive
quarterly review of each clients portfolio to determine if the portfolio
is still on track to meet or exceed the clients objectives. With
this review we will contact you with our findings. We also conduct
a annual meeting with our clients to review how their portfolios
have performed over the year. We will recommend any changes to the
investment selection if needed. West Financial is with you every
step of the way.
Need More Information?
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