The trend in a lot of financial advisory firms is to fit clients into one of 5 or 6 model portfolios, either their own or outsourced to a third-party. For the advisor, it is much easier to implement and manage model portfolios. This allows them time to add more and more clients. If the advisor is outsourcing investment management, that allows for even more time as another company is handling most or all of the investment management.
While this may be a great growth strategy for the advisor, what about the client??
- Is one of these 5 or 6 model portfolios really the best portfolio design for the client?
- What if the client wants to deviate from the model portfolio by either including or excluding certain investments? Can they customize their portfolio?
- Does the model portfolio apply to the overall portfolio (all of the client’s accounts), because usually they only apply to certain accounts as a model often can’t accommodate the limited investment options of 401(k) plans and taxable positions with larger capital gains.
- Is outsourced investment management (with its additional fees and security risks) really in the client’s best interest?
- Is the client’s situation in mind when firm-wide changes are made to the model portfolios, or when a 3rd party decides to bulk trade certain positions?
- Is the client aware of, or have a say in, trades before they happen?
At Blue Water, we take a different approach:
We believe in customized portfolios, not model portfolios. This allows us the flexibility to design a portfolio that’s tailored to your situation, your accounts, and your level of comfortability.
We believe in providing investment management ourselves, not outsourcing it to a third-party. This allows us to provide a more personal experience and to keep costs lower. We use sophisticated portfolio management software to monitor your portfolio, set various alerts, and track your progress.
We believe in keeping our clients informed. If we see a need for a trade, we’ll contact you and explain the reasoning beforehand. If things are rolling along just fine, we’ll periodically reach out and tell you that too. And we’ll send you reminders of tasks that still need to be completed, like updating beneficiaries on your Roth IRA, etc.
Blue Water provides portfolio design and investment management solutions for a variety of clients. We use the combined principles of advanced academic research and Nobel Prize winning concepts to build and manage low-cost, extremely diversified portfolios. The philosophy and engineering behind our portfolios is very sophisticated, but they are implemented in a manner that is straight-forward and easy to understand.