Tuesday, December 15, 2015

The Robo Portfolio Mentality

Multi-Asset Class ETF Investing
In this blog post, I’m introducing Koch Capital’s Global Risk-Managed Flexible Core (FLEX) managed portfolio solution. This is our core investment strategy for clients saving for retirement.

I have to admit that the robo portfolio providers irritate me. Since when does a fancy nancy portfolio guarantee your path to savings nirvana? Most traditional advisory firms I know have been providing Separately Managed Accounts (SMA) / Managed Accounts effectively and efficiently for years. They also provide the advisor expertise to execute a comprehensive financial plan that integrates tax, estate, insurance, cash flow and behavioral planning, not just portfolio management.

Engineering a Better Portfolio     
Yet, I still get asked at cocktail parties “how do you pick stocks?” or “what do you think of xyz company?” So, here’s the technical skinny on Koch Capital’s portfolio construction methodology.

Click here to watch video
Source: Koch Capital

First, we use Riskalyze to measure an investor’s downside risk tolerance. Specifically, how much hard dollar loss (unrealized) in your account can you withstand before hitting the eject button. Second, we engineer globally-diversified, lower volatility portfolios to help prevent you from making an emotional bail out decision. Third, we stress test our portfolios to see how they will behave during economic periods of recovery, recession, inflation and deflation. Since the loss of purchasing power destroys lives, we focus on inflation. Fourth, by utilizing an adaptive modeling approach, we incorporate market and economic factors to frequently re-evaluate not only our investment thesis but also adjust our clients’ comprehensive retirement plan assumptions beyond just expected portfolio returns. You may call this active management, I call it prudent.

Know Thyself, Know Thy Limits
It’s not what you don’t know that trips you up when investing for retirement. It’s what you think you know for sure that just ain’t so to paraphrase Mark Twain. Unfortunately, investing incorporates many random elements that are beyond your control, so smart planning is paramount to mitigating the risk of failure to reach your investment as well as retirement goals.

Source: Koch Capital

Thank you for your interest in my therapeutic vent........Jim

About Jim Koch
Jim Koch is the Founder and Principal of Koch Capital Management, an independent Registered Investment Advisor (RIA) in the San Francisco Bay Area. He specializes in providing customized financial solutions to advisors, individuals, families, trusts and business entities so they are better able to achieve their goals. Jim sees himself as an "implementer" of financial innovation, using state-of-the-art technology to provide practical investment management and retirement income planning solutions for clients.

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