Your Personal Goals Should Guide Your Investing


A key to your successful investment experience is our focus on understanding your personal goals. Once we understand your personal goals, we develop an investment strategy which is aligned with them. Our initial focus is not on which stocks or investments to buy.

This is a big picture view. We want to understand your thoughts, feelings and priorities about:

  • Your various investment goals, such as saving for your retirement, funding education for your children or grandchildren or purchasing a vacation home
  • Retirement planning
  • How comfortable you are with stock market volatility
  • What your investment time frame is and how the time frame may differ for each goal that you have
  • Charitable desires, both now and in the future
  • Providing financial support to family members

Once we identify your goals, we develop your portfolio. If you have various goals, you may have multiple portfolios, each with different timeframes and asset allocations (for example, the percentage that is allocated to stocks v. fixed income). For example, CR The Only Goal That Matters (2)a portfolio for a child starting college in 3-5 years would have much more invested in fixed income (more conservatively) than the same family’s retirement portfolio which is to last 40+ years in the future.

We tailor each investment portfolio based on your specific individual needs and personality, considering such things as your comfort for risk and stock market volatility. It is important to emphasize that we do not make these strategic asset allocation decisions based on predictions or guesses about the near term direction of the stock market. That is not a winning strategy. The most effective strategy is to design a portfolio (or multiple portfolios) that has the appropriate stock market allocation to meet the desired goal(s) that you have.

As every person is different, every portfolio will be different. We make decisions to buy or sell investments based on each client, individually and one at a time. Unlike some other financial advisors or money managers, we do not make buy and sell decisions for all of our clients at the same time. If you are not a client or have another advisor and frequently see relatively small trades of stocks or mutual funds, that is an indication that the advisor is managing all of their clients’ portfolios as one. That is not our approach. We take a highly individualized approach to investment management.

To show you how your personal goals should be reflected in your investing, let’s review some hypothetical examples.

Family A is a couple with a $10 million portfolio. Their personal portfolio of $8 million is invested with a 35% stock / 65% fixed income allocation, as their primary goal is to maintain their standard of living while providing some opportunity for growth. They have also established a $2 million family foundation, which has a 50% stock / 50% fixed income allocation. This allocation is more aggressive than their personal allocation, as the family foundation portfolio has a much longer time frame and they are more willing to take risk in this portfolio.

Family B is a couple in their 60s with $20 million invested with a 70% stock allocation. They have many other assets and are still accumulating wealth. They are comfortable with stock market volatility, desire growth and recognize the long term benefit of greater stock market exposure.

Person C is a 70 year old woman who was widowed. She has a $5 million portfolio and is very comfortable with a 50/50 portfolio, which provides her with both growth opportunities but not excessive volatility.

Family D is younger with significant income and 3 children, ranging from 10-17. For their long term savings and retirement portfolio, they are 75% invested in stocks. For their children’s college saving accounts, each child has a different portfolio, ranging from their youngest child (65% stocks) to their child close to college age (less than 20% stock exposure).


  • Investing is personal and should reflect your personal goals and comfort level.
  • If you have different goals with different time frames, you may want to have different portfolio allocations for each.
  • Your goals, assets and comfort levels change over time. As we manage your investments in a very individualized manner, we would make portfolio adjustments as your life changes.





Learning From The Past Can Improve Your Financial Future

Our goal as financial advisors is to provide our clients with a successful investment experience and help you meet your personal and financial goals. By working together, we want to provide you with a greater sense of comfort and security so you are not worrying about the financial markets and your investments.

There are some very important investment lessons to be learned from the significant declines in 2008-2009, and what has occurred since then. The more that you understand what has occurred since 2009, the more successful investor you will be going forward.

Who could have predicted that the S&P 500 (a benchmark of 500 large US based companies) would have rebounded 197% since March 2009? The S&P 500 was around 1500 in mid-2007, declined to below 700 in early 2009 and is now just under 2000. Some investment lessons from this period are:

  • It is vital to have faith in the resilience of companies and countries throughout the world. In times of great economic difficulty, it is necessary to focus on the longer term and ability of companies to adjust and return to profitability.
  • There will always be problems of some type (economic, political, etc). Today, as the markets are near high levels, many are predicting huge declines. We don’t know if they are correct. However, we do know from what occurred in 2008-09 that overreacting to “concerns” is not the right strategy for a long term investor who wants to be successful.
  • It is nearly impossible to accurate time the market. It is hard to properly predict when to sell at a top and then time it again to buy back at the low. This may seem easy with the benefit of hindsight, but it is not reasonable to do “in the moment.” Our long term investment policy of developing of a globally diversified portfolio for you and your family has a much greater chance of success than trying to time the stock market.
  • Those who thought “this time is different” in 2008-09 were not correct. The markets continue to teach us that being patient pays huge rewards. There will be corrections, declines and bumps along the way. We help you to have the mindset and financial plan to deal with the volatility that is inherent in investing in stocks. If you are mentally prepared for the declines that will happen again, you will be rewarded by the long-term gains in the stock market.

Predicting interest rates and inflation is just as hard as predicting stock market moves. Most analysts and even the Federal Reserve would not have thought in 2009 that interest rates would still be this low. It is important to build a fixed income portfolio that is not based on interest rate predictions.

Inflation concerns: Many people feared that inflation would be much higher now, caused by Federal Reserve actions since 2008. Inflation has not become a problem yet and appears to be well under control. We did not adjust our investment philosophy and our clients’ portfolios because of a concern about something that may occur. The key is that we adhered to our investment philosophy and plans.

What we avoided: We have not invested in hedge funds, illiquid real estate funds and other alternative investments. Many of these investments have not performed well or some investors have been unable to get their money out of these types of investments when they want. We invest in assets that are liquid, understandable, transparent and low cost.


It is important for you, and us as advisors, to take time to think and reflect on what has worked well and what has not been successful. We learn through observing, reading, researching and processing what has occurred. Our clarifying these investment lessons from the past and communicating them to you will improve your financial future.

Our writing these blog posts is one way to do this. It is a way to document our thoughts, consider investment lessons and help to plan for your future. The more we reflect on what has occurred over the past 5 years, the more conviction we feel that our investment philosophy is the proper strategy for you, your family and your friends.

How To Improve Your Estate Plan


Estate planning is very important. It is not just about minimizing estate taxes. It is what happens to your assets after you die.

Just get started and work with a team:

For many people, a key to overcoming the resistance of dealing with estate planning matters is to just get started. Talk to us. We have very effectively assisted numerous clients with conversations that help them get the ball rolling. We talk about what matters most to you, what you want to accomplish and how you want to pass on your assets. We help to clarify your goals, simplify the estate planning process and provide creative suggestions.

After these conversations, we can meet with you and your estate planning attorney to begin the drafting phase of the process. Quality DecisionsIncluding us in the attorney meetings ensures your goals are properly communicated and implemented. We help to facilitate the process, by explaining concepts and brainstorming ideas with you and the attorney. We review the estate plan documents after your attorney has drafted them, to ensure again that they reflect your intent. We often provide additional recommendations after reviewing the draft documents. Teamwork and conversations are vital in this process.

How to handle distributions to the next generation

There are many ways to handle passing your assets to the next generation. We have extensive experience in these matters as financial advisors and CPAs working with clients. Consider the ages of your recipients and whether they can handle the amount of money they may be receiving. If you anticipate the recipient will inherit $5 million from your estate plan, consider whether that person has ever managed or dealt with that amount of money. If they have not, we advise staggering the transfer of money over a period of time. While many estate plan documents and attorneys provide money incrementally to younger adult children, say in their 20s and 30s, we think this concept is valid for much older “adult children” if they have not handled large sums of money before.

Put the assets into a trust and establish a distribution schedule. The recipient would have use of some money initially and then have the right to receive additional increments, for example, every 3-5 years. There should also be provisions for emergency distributions, during interim periods, subject to guidelines the trustee would need to follow.

The key consideration in whether to gradually release the funds to the next generation is their ability to handle the new wealth. By staggering their receipt of the money, hopefully any financial mistakes (or excessive spending) will be made with the first increment and they will be better able to handle the later increments.

Make distributions flexible, not mandatory

When distributions are transferred from one generation to the next, make the distributions flexible. If your document states that assets are to transfer at a specific age, make the distributions optional. Have the recipient initiate the transfer. If someone is facing a divorce, they may want to delay the distribution of the assets. If the distribution is mandatory, there could be negative consequences. Many issues are easily avoided by having more flexible distribution methods in your documents.

Leave your assets in trust name, to leave them properly

If you have significant assets that you are leaving to family members, we advise leaving the funds to the next generation in a trust for each recipient. If handled properly by each generation, the money is more likely to stay within your family lineage.

The process is not complete when you sign your estate plan documents

Think of drafting your estate plan as setting up an empty box. An estate plan usually involves establishing trusts, which are like empty boxes. When you leave the attorney’s office after you sign your documents, you feel a great sense of relief and accomplishment, that you have finally handled this process.

However, the process is not finished. You need to make sure that your boxes (trusts) are properly filled. Your assets (investment accounts, property, insurance policies, partnerships, etc.) need to be titled correctly so that they are owned in the name of the trusts which are established in your estate plan. If this is not done, more work will be required after you die to ensure that your wishes are properly handled.

If you want to leave assets to a charity….

If you have a retirement plan or an IRA account, your charitable bequest(s) should first be from these accounts, not your other assets. This will be a huge tax savings to your heirs. This needs to be done through the beneficiary designation form of the respective account, not in your will or a trust document.

Estate planning is about much more than reducing the estate tax

Estate planning for a long time has been about reducing a potential estate tax. While this is still important (and I will discuss that in the future), the emphasis should be on clarifying your goals and creatively implementing them.

We strongly encourage family members to have muti-generational conversations about these topics. Talk to your children and grand-children, depending on their ages. This can be difficult, but if done, can be invaluable. These conversations can lead to your heirs being better prepared for their financial future. It can prevent huge financial problems, by talking and planning together now. We are here to assist with these conversations.

Estate planning can be complex. This article has provided some suggestions and I will provide more in the future. Our goal is to help you manage your resources and provide you with clarity, advice and capabilities to handle your various financial challenges.

Thanks to fellow BAM Alliance member Carl Richards for the use of his sketch.


What Happens When Interest Rates Rise?

For many years, interest rates have been very low. Interest rates will eventually begin to rise. We cannot know when interest rates will begin to rise, how high they will go or how fast the increase will be. Now is the time to make sure your portfolio is properly structured for the inevitable rise in interest rates.

You must understand a basic concept: when interest rates rise, the value of bonds fall. If you own individual bonds, this decline should be temporary until the bond reaches maturity. For bond mutual funds, the decline will be permanent Interest Ratesand potentially significant. For this reason, whenever it is practical, we recommend holding individual bonds and not owning bond mutual funds for your fixed income portfolio. (In this article, I’m using the term “bonds” to cover all types of fixed income securities, such as government, corporate and municipal bonds, marketable certificate of deposits, etc.)

When interest rates rise and you own an individual bond, the value of that bond will decrease, but the decline will only be temporary. As the bond nears its maturity date, the price of the bond will increase back to its face value. For example, if you own a $100,000 bond with 5 years remaining to maturity and interest rates rise, the price of the bond will decline, say to $95,000. At the time the bond reaches maturity, you would receive your full $100,000. The key is that a rise in interest rates causes only a temporary price fluctuation for an individual bond.

How much could bond funds decrease in value?

The longer the maturity of the bonds held by a bond mutual fund, the greater the permanent decline in value will be. What was intended to be a safe investment would incur tremendous losses.

  • If the duration of the bond fund is 7 years and the rise in interest rates is 3%, the decline in the fund value would be 21%.
  • If the duration is 10 years and interest rates increase 2%, the decrease in fund value would be 20%.
  • An additional rise in interest rates of another 1%, for a total increase of 3%, would cause that fund to lose a total of 30%.

What do we recommend now?

You should review your fixed income portfolio. If you have a significant portfolio, you should own well diversified, very high quality bonds of short to intermediate length. We do not recommend owning bonds of longer than 7-10 years, depending on the individual and someone’s personal situation.

You should not own bond mutual funds, other than in a 401(k) or similar retirement plan (see below).

If you do own a portfolio of individual bonds, you should be prepared for a temporary decline in the their value when interest rates rise. If you understand this concept, you will understand why this fluctuation is occurring. You will realize why your portfolio value has declined and that you will recoup this “loss” as the bonds reach their maturity dates.

If you do own bond mutual funds, they should be carefully reviewed. We would be pleased to review these funds for you. Now is the time for this analysis. When interest rates rise, and particularly if they rise quickly, it is possible that many investors will pull money out of bond mutual funds and accelerate the price declines. The time to plan for this is now, not when the interest rate increase is occurring.

If you participate in a 401(k) plan or similar type of retirement plan, owning individual bonds is not an option. To own fixed income in these investment vehicles, you need to own a bond mutual fund. We recommend that you hold only shorter term bond funds, with maturity and duration of 4 years or less. With shorter maturities, the fund will be impacted far less by a rise in interest rates. It is also important to review the credit quality of the bond mutual fund, as those holding high yielding (or junk bonds) have been hit the hardest in times of rising interest rates or panic selling in the bond markets.


We hope that you take a close look at your fixed income investments. Review your portfolio and understand if you own individual bonds or bond mutual funds. Contact us if you have questions. We are providing you with clarity and planning that will be important in the future. This type of guidance will provide you with greater security and comfort in the years ahead.