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The Right Tools For The Job

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I competed in my first triathlon recently. The race was a challenge, but also a lot of fun. And while I completed the race (and beat my friend who talked me into signing up!), there is a lot of room for improvement if I decide to compete again—especially on the bike.Motobecane

You see, I went on a grand total of one training ride and was in the saddle of a mid-1970’s Motobecane Nomad Sprint—not exactly the latest and greatest in biking technology.

Finishing the race wasn’t the problem. But, better preparation and having the right tools for the job (e.g., a better bike and cycling gear) would have made for a better result.

Whether you’re a triathlete or investor, you can benefit from the same concepts: Preparing, instead of winging it, and having the right tools for the job will translate into a much better outcome.

At Cordant, we work with “deliberate investors”. People who see the value and commit to an intentional process, with the “right tools”, that advances them towards their goals.

So, what are the “right tools” for effective wealth management? Here’s a list of some important ones we use at Cordant:

  1. A discovery process – Investing without starting here is a bit like taking a vacation without first deciding where you want to go. Sure, you’ll end up somewhere. But, is it somewhere you want to be? You might get lucky and end up somewhere cool or interesting, but you could just as easily end up somewhere you really don’t want to be (one of these places maybe).

In order to optimize your results, we have a systematic process to discover and document your financial vision and strategic objectives (we call this the Financial Blueprint). Getting these things down on paper, being deliberate about where you want to go, leads to the best results.

It’s deciding where you want to travel before setting out on the road and making sure you bring the right equipment for your vacation, your race or your financial future.

 

  1. A financial plan – After you’ve defined your objectives, you need the right tools to turn this into an actionable strategy and intentionally advance towards them.

A good financial plan is customized to your objectives and your resources. When you spend your wealth is important, not just how much you are spending. A financial plan provides the confidence of achieving the results you are targeting. Writing it down keeps you on track (as you’ve pre-committed to the plan), and it serves as the reference points for future decisions.

 

  1. A trading process – Another tool we use is trading software. This does several things for you. First, it enables constant monitoring of your portfolio. If your portfolio gets out of balance (e.g., having too much stock during a bull market or too little due to market movements in a bear market), we’re alerted to this fact and prompted to rectify the situation.

Another benefit is enabling investment integration. This is a process of managing all your accounts as one coordinated portfolio. And there are several potential benefits of integration: incremental returns, lower taxes, lower investment costs, customized risk exposures and timely execution.

For example, managing all your accounts as one portfolio allows you to implement an asset location strategy; this is placing your least efficient investments from a tax perspective in your tax-deferred accounts. Implementing asset location can save you between 0.20% - 0.75% per year, depending on your specific mix of assets,[1] which can add up to significant savings.

 

  1. A reporting system – Another important tool in the wealth management toolkit is performance reporting. We’ve written before about the importance of examining past performance, but this is only possible with the right system in place.

We heard just the other day from an employee of Intel frustrated with the lack of a consolidated system to view the performance on his various Intel accounts in addition to his accounts outside of Intel. Even if all your accounts are at one custodian (like Fidelity for the Intel retirement accounts), the performance reporting available through the custodian’s site is often lacking.

At Cordant, we have a performance reporting system set up to integrate and report on all your assets—no matter where they are held. This allows you to view all your accounts in one place and access robust analytics on your accounts such as: investment returns over multiple date periods, gains or losses for tax purposes as well as the ability to view your current holdings and asset allocation across all accounts, and view capital flows or transaction history for all your investments in one spot. These reports are available online and can be viewed anytime.

 

If you’re interested in learning more about putting the “right tools” to work for you and expanding your wealth management toolkit – whether you’re preparing for your next triathlon or preparing for retirement – we look forward to speaking with you.

 


If you’re interested in learning more about putting the “right tools” to work for you and expanding your wealth management toolkit – whether you’re preparing for your next triathlon or preparing for retirement – we look forward to speaking with you.

GIVE US A CALL AT 503.621.9207.


Click here for disclosures regarding information contained in blog postings.

 

 

[1] Jaconetti, Colleen M. (2007) “Asset Location for Taxable Investors” and Gobind Daryanani, Ph.D., CFP®, and Chris Cordaro, CFP® (2005). “Asset Location: A Generic Framework for Maximizing After-Tax Wealth” Journal of Financial Planning 2005.

 

 

Click here for disclosures regarding information contained in blog postings.
Cordant, Inc. is not affiliated or associated with, or endorsed by, Intel.

Published on September 08, 2015

Isaac Presley, CFA

Isaac Presley, CFA

Isaac Presley is the President and Director of Investments for Cordant, a wealth management firm serving current and former Intel employees. To learn more, you can read Isaac's full bio.

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