Our Philosophy and guiding principles

We believe planning is the essential first step toward successful investing and the foundation of our relationship with clients. The plan helps you set financial goals, gives you an idea of how attainable they are and points you toward achieving them. Once implemented, the plan helps measure your progress toward those goals. And, along the way, having a plan allows us to make financial decisions proactively instead of simply reacting to the markets.

Goals come first. Then the plan. And only then do we invest.

It’s simple and convenient to measure your portfolio’s performance against a popular market index such as the S&P 500. The problem is, outperforming an arbitrary benchmark is no guarantee that you will reach your goals.

If you can’t buy your dream home, for instance, or get the money you need to cover your expenses in retirement, what does it matter if you’re beating the market?

We believe the only financial benchmark that truly matters is the one that shows whether you are on track to reach your goals. Every plan we create for our clients helps us determine what long-term rate of return is necessary for them to succeed, and it is against that number that we measure your success.

Once we calculate that number, we put it on every performance review that we send to our clients – to keep us all focused on what truly matters.

Our stated mission is to help clients set and pursue their most cherished financial goals.

Goals-based wealth management involves designing an investment portfolio around specific goals, paying particular attention to when each goal needs to be met. For example, if you have money set aside to buy a new car six months from now, those funds should be protected from unpredictable market fluctuations so that it will be there when you need it.

For intermediate-term goals – money you plan to withdraw over the next two to 10 years – fixed-income investments might be more appropriate.

And for longer-term goals, such as a newborn child’s future college education, or the income you’ll need for a long and happy retirement, equities might be a better fit, given that they have historically offered higher returns than most other types of investments over the long haul.

Knowing how these investment categories have performed over various time periods – in terms of both return and risk – allows us to custom-design portfolios around the specific needs of each of our clients. Our clients understand the time-tested logic behind investing this way, and it helps them stick to their plan during challenging market environments.

That dollar in your wallet isn’t money; it’s just currency, and it loses some of its purchasing power every day to inflation. Most of the time, this quiet erosion of value happens so slowly that you can’t feel it. But over a typical 25-year (or longer) retirement, an annual inflation rate averaging just 3% will destroy more than half of your purchasing power. And that means your income in retirement will have to double just to maintain your standard of living.

Investors who pursue “safety” by preserving their principal at all cost are virtually assured of losing purchasing power over time, which, in our opinion, is anything but a safe strategy.

We believe the first objective of any investment program, therefore, should be to prevent the erosion of purchasing power over time by earning a return that exceeds the rate of inflation.

We believe that creating wealth comes down to this simple formula: Spend less than you earn, save and invest the difference, and repeat until your portfolio generates enough income to support you for the rest of your life.

Eventually, the whole purpose of saving and investing becomes having: 1) income you can spend today, 2) income you can spend tomorrow and 3) income someone else can spend once you no longer need it. Given what we know about inflation and its effect on purchasing power, your ultimate investment objective must be to find investments that are capable of producing an adequate income that grows faster than your spending over time.

Owning shares of profitable, well-run businesses has been far more effective than other types of investments at preserving and enhancing purchasing power over time. We believe that investing some portion of the portfolios we manage in a broadly diversified selection of high-quality companies gives our clients the best opportunity to reach their long-term financial goals.

Ongoing research has shown that companies that regularly increase their dividends have historically delivered higher returns over long time periods compared with those that reduce, eliminate or choose not to pay dividends. The same research shows that these companies as a group have been less volatile and have held their value better during challenging market environments.*

All other factors being equal, we prefer for our clients to own shares of growing businesses that have shown an ongoing commitment to sharing profits directly with their owners in the form of cash dividends. Contrary to popular thinking, we believe these companies make it possible to generate a stream of rising investment income that can be sufficient for our clients’ spending needs without having to systematically liquidate their savings in the process.

We are not interested in the short-term direction of markets, nor in the people who attempt to forecast them. Instead, as portfolio managers we look for successful businesses whose shares we can acquire for our clients at what we feel to be attractive prices. And we believe the best way to capture the superior long-term historical return of equities is by owning them for a long time, even when they temporarily decline in price.

If we can agree that success is defined as reaching your goals, then risk can be defined as the possibility that you won’t reach them.

The fact that stock prices go up and down unpredictably day to day makes them volatile, which is different from risk altogether. We believe that the long-term return that equities have produced in the past is actually due in part to their volatility. Equity owners expect to be compensated over the long run for tolerating this volatility, and historically they have been rewarded.

If risk is the possibility that you won’t reach your financial goals, and investments with greater long-term return potential make it more likely for you to reach them, then owning equities in pursuit of long-term goals could reduce risk.

History tells us not to be surprised when stock prices fall temporarily by 10% or more in any given year. It also tells us that bear markets – where prices fall broadly by 20% or more before recovering – are completely normal and tend to occur every few years on average.

These downturns are a natural part of business and market cycles and are of little concern to investors who have funded their short- and intermediate-term spending goals with more predictable investments, such as fixed income and cash equivalents. This gives the equity portion of their portfolio time to recover, all the while potentially providing a source of dividend income. Designing a portfolio in this way reduces the likelihood of having to sell stocks at the wrong time.

We firmly believe that investment performance does not determine real-life returns. Investor behavior does. Studies have shown – and tend to confirm year after year – that investors as a whole underperform the very investments they own. The reasons are many (chasing past performance, poor timing, panic-selling, etc.), but we believe the common denominator is that investors too often base their decisions on emotions.

The greatest value we add as financial advisors is not in finding the best investments – improbable if not impossible – but in making our clients better investors by helping them make better decisions and avoid the mistakes in judgment that often accompany challenging markets.

The future likely holds more natural disasters, poverty, wars, pandemics, crime and inequality, just as we have seen in the past. But the advancement of humankind has occurred largely as a result of overcoming problems such as these, over and over again. Based on a careful study of the past, we believe in a brighter future and invest accordingly.

There will always be reasons not to invest. But we have yet to find a way to build a long-term investment strategy based upon fear and apprehension, and we can add no value to those who are always in search of the next economic disaster. Pessimism is not an investment strategy.

We don’t invest based on market trends or what’s in today’s headlines. We won’t confuse activity for intellect by trading our clients’ portfolios frequently. Once we have committed to what we feel is a sound investment decision, we aim to give it time to work. This allows us to focus on what is truly important to the clients we serve: helping them set goals, build plans around those goals and manage their investments toward reaching them. Instead of predicting the future, we choose to plan for it.

We believe that the only sustainable basis for a successful advisor/client relationship is perfect mutual trust. We earn the trust of our clients by telling them the pure, undiluted truth – as we are given light to see it – all the time. Our role is not to convince or persuade; it is simply to tell the truth and give our clients the most objective advice we can offer them.

We recognize that relationships rarely begin with complete trust. Trust is earned over time by listening, by understanding and by doing what you say you’ll do – time and time again. And once trust is established, it becomes much easier to give – and follow – good advice.

Each member of Brown Family Wealth Advisors is a client of the practice. We manage our family’s investment portfolios with the same care that we use for our clients. And we pay a fee for it, just as our clients do.

In fee-based accounts, our advisory fee pays for the financial plans we design and update. It pays for the portfolios we design and all of the transactions involved in managing them following fiduciary standards. It pays for monitoring the portfolio, adjusting it as necessary and reporting on its progress. And it pays for a custom-designed client experience.

We believe good advice should pay for itself.

In a fee-based account clients pay a quarterly fee, based on the level of assets in the account, for the services of a financial advisor as part of an advisory relationship. In deciding to pay a fee rather than commissions, clients should understand that the fee may be higher than a commission alternative during periods of lower trading. Advisory fees are in addition to the internal expenses charged by mutual funds and other investment company securities. To the extent that clients intend to hold these securities, the internal expenses should be included when evaluating the costs of a fee-based account. Clients should periodically re-evaluate whether the use of an asset-based fee continues to be appropriate in servicing their needs. A list of additional considerations, as well as the fee schedule, is available in the firm's Form ADV Part II as well as the client agreement.