Risk
Subjective risk questionnaires often miss the mark. Modern Wealth’s approach uses the risk number, and everyone has one. We combine our depth of investment knowledge, philosophy, and cutting-edge technology to empower our clients to invest fearlessly.
We take a quantitative approach to pinpointing your risk number by going through a series of objective exercises based on actual dollar amounts. If you’ve already got an investment portfolio, we can quickly import it and see if your risk number aligns with your current amount of Risk. Then, we’ll use all these factors to build an optimized portfolio that fits your risk tolerance and goals, giving you the best chance for success.
We will also stress test your portfolio against specific market conditions, illustrate various scenarios, discuss your 95% probability range, and set expectations for what is normal behavior for your investments. We will also chart a path to retirement using a simple, intuitive approach, visualize the probability of a successful retirement, and adjust in real-time. Together we can take the guesswork out of your financial future.
Diversification
Concentrating on one stock exposes clients to unnecessary risks. Diversification reduces the impact of any one company’s performance on our wealth. Research shows no reliable way to predict top performers. So broad diversification helps mitigate unnecessary risk.
A well-diversified portfolio can provide the opportunity for a more stable outcome than a single security. Nobody knows which markets will outperform from year to year. By holding a globally diversified portfolio, we are positioned to capture returns wherever they occur.
Analytics
We use interactive historical and statistical data related to your portfolio and compare it with about anything – market indexes, models, blended benchmarks, and individual securities. We then check on the diversification of a particular fund or account with correlation, diversified risk, and 95% historical capture analytics.
Next, we look closely at a portfolio’s exposure to equity and bond sectors and a fund’s regional exposure. Finally, you can feel confident knowing what’s under the hood of your investments.
We also use a risk and reward scatterplot, which paints the picture of risk efficiency by comparing your portfolio to standard benchmarks and indexes, shifting between multiple time frames, and delving into the top 10 portfolio holdings.
It’s also important to visualize data from both sides. For example, we toggle between “size” and “style” to see the breakdown between small, mid, and large-cap or value, blend, and growth/value funds within a portfolio.
Ever wish you could make changes to your portfolio and immediately see the impact? From minor tweaks to significant alterations, we allow you to test potential changes in a portfolio and immediately see the effect before implementing a strategy.
Bias
People follow their instincts and tend to apply faulty reasoning to investing. Often, investors may struggle to separate emotions from investment decisions. Following a reactive cycle of excessive optimism and fear may lead to poor decisions at the worst times. Missing a few days of strong market returns can drastically impact your performance.
Our disciplined approach looks beyond the concerns of today to the long-term growth potential of markets. We offer expertise and guidance to help our clients focus on actions that add value, leading to a better investment experience.
Strategy
A portfolio must reflect your risk tolerance, goals, and time horizon. In addition to that, our custom strategies are aligned with your unique values and circumstances. They include:
Core / Satellite
Strategies in this mandate are the central investments of a long-term portfolio. Therefore, the core holdings must have a history of reliable service and consistent returns. Secondary investments are called satellite or non-core holdings. They focus on growth/value stocks or specific sectors of the market.
Multi-Manager Strategist
This strategy provides access to investment strategists who construct distinct portfolio solutions to help meet the ever increasing demands of our clients. They typically comprise a set of mutual funds and/or exchange-traded funds (ETFs).
Managed Accounts Solutions
Managed Account Solutions consists of specialist money managers managing individual portfolios of stocks or bonds based on a specific investment style. Representing the full spectrum of asset classes and styles, the managers provide security selection expertise within their specific investment style.
Distribution Focused Strategies
Distribution-Focused Strategies are designed to provide a “paycheck-like” cash flow for a specific time period from a diversified mix of mutual funds. Multiple strategies are available to help investors meet their cash flow goals, based on risk tolerance and desired time horizon.
ESG / SRI
Our ESG and SRI portfolio strategies are investing approaches that reduce exposure to companies deemed to have a negative social impact and positive environmental, social, and governance characteristics.
Tax Sensitive
Our Tax Sensitive portfolio strategies are designed for people whose key objective is to manage tax liability. These strategies offer a strategically tax-efficient management approach in a broadly diversified portfolio.
Fixed Income
Using certain bond strategies can help our clients achieve their investing goals, may provide a stable income stream, can reduce risk for funding major purchases, and potentially minimize volatility. These strategies include:
- Ladder Strategies
- Barbell Strategies
- Bullet Strategies
Alternative Investments
Alternative investments are financial assets that do not fall into one of the conventional investment categories and can have a low correlation to traditional asset classes. For example, alternative investments strategies may include:
- Private Equity
- Private Credit
- Venture Capital
- Hedge Funds
- Real Estate
- Managed Futures
- Arts and Antiques
- Commodities
- Derivatives Contracts
- Exotic and Classic Vehicles
