This is about helping you ensure that your qualified plan is working for you. It could be your defined benefit, 401(k), 403(b), profit sharing, SEP or similar employer-provided plan. Within each of these plans, there are a multitude of investment options for you to choose from, which can be numbing and concerning when deciding which to select. We have a clear investment strategy to guide you and continue guiding you.
Raymond James has again shown their “client first” mindset by embracing the fiduciary standard1 other large companies may not. That means we can advise you specifically as to how to select your investments where others may not.
The plan provider will provide the retirement plan, the track record of the choices, as well as details of what the investments do, but they are unlikely to give you specific advice. This might tempt you to look only at the last few years of performance and select an asset class that has done well but, unknown to you, is on the decline.
If the plan provider has not embraced the fiduciary standard, they may not advise you other than to look at a lifestyle fund if you are unsure. This may well be a bad idea for a number of reasons and while a face-to-face meeting is a better way to explain, the following comments go some way to providing a reason for that comment.
We rely on Asset Class Group scores to broadly indicate which asset classes we should own. There are 134 asset classes scored, and U.S. money market is one of the asset classes. The concept is simple; if you buy an asset class listed below money market, you are more likely to lose money. Money market sits at #129 on May 31, 2017.
We attempt to buy the highest-scored investment classes based on relative strength. As a simplistic and partial example, we might have 20 investment choices. We might score each of them relative to one another; and much like a sports franchise ranking system, the stronger teams relative to their competition become the top-ranked teams. It is not going to hurt us if we end up owning only three of the top four investments, but our intent is to ensure we don’t get dragged down by owning poor choices.
We use a tool provided by an independent third-party technical research company which scores all investment plan options. With those scores, we list all choices and score all positions on a risk quadrant. We eliminate the low-scoring positions and aspire to own the top four or five investments only.
Imagine if you will that you own the two best investment choices and the two worst. If the two that were the best were each up 20% and the two poor ones were down 20%, you would have zero performance. Our intent is to own the strongest positions in the strongest asset classes while they are strong. If this service is appropriate for you, we offer a portfolio review and change of investment choices every four months.