ASSET PLANNING AND INVESTMENT CONSULTING  

The vast majority of today’s so called “financial advisers” are not advisers in the purest sense of the word.  They’re either sales people or independent portfolio managers.  As such, they confine their activities to only one aspect of the process; that is the selection of individual financial products or securities with certain characteristics within a specific asset class that meets the criteria for a particular outcome, which, incidentally, can vary considerably from adviser to adviser.

When an adviser focuses all energies and resources on the day-to-day activities of one endeavor, the unfortunate consequence is that the most central responsibilities of the asset planning and investment management process are left up to you – the client. 

W&A’s role is to fill that void by implementing, on your behalf, an integrated set of activities that are combined in a logical, orderly manner, aimed at systematically controlling the risks and rewards of investing.  W&A accomplishes this by helping you to: 

Develop well-reasoned investment policies that can lead to the achievement of your financial goals and objectives. 

Engineer asset allocation structures that protect you from the sometimes-grim realities of the capital markets, without sacrificing opportunities for consistently above average results. 

Research and prescribe portfolio management organizations that have successfully managed your selected asset classes. 

Coordinate secure and cost-effective custody and/or master trustee relationships that will assist you with the burdensome task associated with the implementation and administration of your investment program. 

Conduct ongoing performance measurement and evaluation studies that give you an understanding of the sources of investment results, and provide you with the necessary knowledge for informed decisions and affirmative action. 

Independently, will any one of the foregoing produce the outcome you want or need?  No.  A process, no matter how rigorous, is nothing more than a series of prudent checks and balances if it is not employed in conjunction with a sound overall philosophy, a cost-efficient strategy, and a competent team to manage it all. 

What follows is a detailed explanation of those aspects of W&A’s process that will have the greatest influence on the performance of your investment program. 

PHILOSOPHY & STRATEGY  

W&A’s philosophical approach to the asset planning and investment counseling process is predicated upon a steadfast belief in the power of common sense and the practical realities of the capital markets.  Specifically, the firm believes that every aspect of the process should be managed with forbearance of the following: 

The capital markets are global and are becoming increasingly interdependent at an accelerating rate.  As a result, the velocity of change and the volatility of the capital markets will be in excess of historical norms. 

The timing of change in a business/market cycle cannot be forecast with meaningful accuracy. 

Each asset class experiences extended periods of substandard performance on an absolute or relative basis, or both. 

Within each asset class, there are multiple styles of portfolio management.  As a business/market cycle evolves, portfolio management styles move in and out of favor, experiencing extended periods of either favorable or unfavorable performance on an absolute and/or relative basis; the timing of which cannot be forecast either. 

Within each asset class and portfolio management style, there are portfolio managers with a history of producing exceptional results.  Unfortunately, past performance is not indicative of the future.  Evidence suggests that at some point, an otherwise successful portfolio manager will make an error in judgment that will lead to an extended period of substandard performance on an absolute or relative basis, or both. 

Above all, W&A believes that in an environment of constantly changing themes, only continuous qualitative research employed in conjunction with quantitative investment technologies improves the probabilities or risk reduction and enhanced returns. 

Although W&A does not mandate a specific strategy, the firm strongly encourages you to consider a multi-faceted approach to the capital markets. 

Here’s why.  The markets have proven time and again that no single asset class provides consistent, above-average total return results.  In addition, there are periods when an investment with particular financial characteristics and a manager with a particular style outperform other types of investments and managers within the same asset class. 

Since no one has the ability to consistently predict when change will occur, how is one to protect an investment program from extended periods of substandard performance?  W&A’s answer is to employ a multi-faceted strategy that blends, on a complementary basis: 

Multiple Asset Classes
Multiple Portfolio Management Styles, and
Multiple Portfolio Managers

By creating a mix of management styles within each asset class, and then selecting portfolio managers for their ability to invest in a particular style, the expectation is controlled levels of risk and more consistent rates of return.  The question is, which mix is right for you?  The only way that can be determined is through the asset planning and investment counseling process. 

INVESTMENT POLICY

Individual attitudes and preferences cover the spectrum; from confidence to fear, aggressiveness to conservatism, and optimism to pessimism.  W&A is particularly sensitive to this and, as a result, we are compelled to develop investment programs that are as rich and varied as are the individual needs of our clients. 

The process begins by giving careful consideration to those variables that might place limitations on your investment program: 

Asset / Liability Issues
Needs for Liquidity
Time Horizons
Taxes
Legal Constraints 

In addition, it is important to understand your past experiences and how those events have shaped your current set of attitudes and preferences.  This process creates a profile of your concept of risk and return within five dimensions: 

Capital Appreciation
Capital Protection
Consistency
Current Income
Inflation Protection 

From there, we go to work on the development of realistic goals and objectives and integrate your individual constraints, attitudes, and preferences into the real world of the capital markets.  W&A will help you to establish: 

Acceptable Risk Parameters
Permissible Asset Classes
Target Rates of Return for Each Asset Class
Min/Max Exposure to Single Asset Class
Custom Indices to Measure Custom Asset Mix 

(A more complete discussion of this critical aspect of the process follows in the sections entitles “Asset Allocation” and “Manager Research”). 

W&A will bring your goal into perspective in terms of nominal or inflation adjusted dollars and intervals of time required to achieve results.  What’s more, the numbers will be expressed within three dimensions: 

Best Case
Worst Case
Most Likely to Occur 

Once the objective-setting process is complete, W&A formalizes our agreement of how things should be in a straightforward Statement of Investment Policy, which will document: 

Financial Goals
Minimum Rates of Expected Return
Standard for Performance Measurement
Conditions for Change

In sum, this essential document will not only serve as your set of operating instructions for the investment management process, but also that of a benchmark against which all things shall be measured. 

Asset Allocation Research  

Today, the US is the largest debtor nation.  Wall Street is now only one of many interdependent financial centers around the globe.  Almost daily, new asset classes and investment vehicles are created.  And, the greatest risk facing investment success is the volatility of the capital markets.  Reactions to uncertainty such as the “Crash of `87” and the “Bubble of 2000” are vivid reminders that, indeed, we have entered into a new era. 

W&A approaches the practical realities of the capital markets through a process known as strategic asset allocation – the science of systematically allocating and reallocating money between asset classes (i.e., stocks, bonds, cash, etc.) rather than within an asset class (i.e., IBM to GE, or mortgage backed securities to Treasury securities, etc.). 

CUTODIAN / MASTER TRUSTEE RESEARCH  

Without question, the investment management process has become more complex.  One of its more time-consuming and potentially frustrating experiences is that of selecting the financial institution(s) that will help with the implementation of the process. 

Custodians assume responsibility for the burdensome tasks, which to help unify the investment management process – i.e., effecting settlement of securities following transactions, physically maintaining possession of securities, collecting dividend and interest income, redeeming matured securities, effecting contributions and distributions in cash as well as payment “in-kind” transactions, safekeeping non-standard assets such as GIC’s, BIC’s, LP’s and more. 

Given a custodian’s purview, and the fact that, in many instances, your cash and securities are commingled with that of others clients and the custodian itself, it’s imperative that your custodial organization(s) have sufficient capital, anti-fraud procedures, management controls and insurance protection.  Here are just a few of the factors that W&A will take into consideration in the selection process: 

Regulatory requirements and status                        Timeliness
Safety systems and procedures                              Accuracy
Longevity and stability                                               Cost
Staff and resources
Scope of services
Service capacity

 Another vital factor for consideration is your custodian’s technological expertise and infrastructure.  In this day and time, it is absolutely that your custodian’s platform allow for open, interactive communication among those involved with your investment program.   

Why? Because, we now have something very close to 24-hour trading around the world.  With globalization, the by-product is near instantaneous feedback to shifts in domestic and international monetary and fiscal policy, geo-political events, and the like.  The obvious consequence is that there’s an urgent need for your custodian to be in the position to respond with near instantaneous reporting of data, so as to know if a given strategy is working and why, or why not.  

In connection with globalization, another concern is your custodian’s ability to handle international investments.  Today, more than two-thirds of the world’s stock market value and over half of all fixed-income securities are traded abroad.  None of this has gone unnoticed.  More and more domestic managers are allocation assets to foreign economies.  As a result, a primary concern of W&A is your custiodian’s offshore custodial relationships and their combined ability to network with sub-custodians in as many as 30 countries.  There too, our emphasis centers upon the custodial-network’s safety systems and procedures, speed, accuracy, and cost. 

W&A has a full understanding of the partnership that must exist between the custodian and all those concerned.  Moreover, now and in the future, you can expect us to play an important role in the further development of that relationship.  We stay abreast of new-products, those that are being developed, and those that are likely to come on-stream in the next few years.  Indeed, W&A is positioned to bring you the best ideas in custody and incorporate them into your program. 

PERFORMANCE MEASUREMENT AND EVALUATION  

Maintenance of an overall portfolio’s investment policy, asset structure, and management team is essential.  Most portfolio management organizations change over time.  People, investment philosophies, assets and numbers of accounts under management change.  Economic and investment conditions change.  Thus, there is an important need for ongoing monitoring and program maintenance. 

Every quarter, W&A prepares a performance measurement and evaluation report that focuses on the bottom-line.  You’ll find it to be the decision-making tool that you always wanted and needed. 

It is filled with timely, accurate information.  And, most importantly, you’ll find your performance information presented in an easy to understand, action oriented format that delivers concise, objective answers to difficult and crucial questions. 

We provide you with a summary and the details of your dollar-weighted and time-weighted performance; since inception, calendar year to date, and from quarter to quarter.  And, of course, all figures are net of transaction costs, fees, and expenses. 

Our state-of-the-art graphics technology give you a clear picture of whether or not your portfolio is on track to meet your objectives.  Also, we enable you to see the current asset mix and value of each segment in your portfolio.  You’ll be able to easily determine whether or not your assets were allocated according to your guidelines.  And, you will be able to visually compare how your portfolio is performing in relation to the market indices. 

In addition, so that you can pinpoint individual winners and losers, our report can delineate the exact the economic sectors, industry groups, individual securities that make up your financial position. 

We also document the history of the flow of your funds between asset classes, investment manager, and investment product.  And, we document all of your deposits, withdrawals, interest, dividends, realized and unrealized gains, transaction costs, expenses, and fees. 

Perhaps most important of all, W&A checks on the people and the inner workings of each organization managing client assets.  We report immediately on any occurrence that we believe may impact a firm’s capability.  We will not hesitate to recommend termination of a manager if, in our opinion, a development within the firm suggests a serious negative consequence. 

In the final analysis, W&A’s function is to serve as a reference source to answer questions, solve problems, and to respond to the needs of our clients in any way practical.  We are to be considered an extension of the client.