When exploring the world of investments, it’s important to gain a broad perspective of the various types for a clear understanding of how each individual investment can work towards pursuing your objectives. Each has its own investment characteristics which, when applied individually, may not be appropriate for your financial profile; however, when they are strategically combined in a portfolio, they can work in concert to address your investment objectives within your risk parameters. It is, therefore, important to consider all investments in light of your specific objectives and risk tolerance.

Asset Allocation

Asset allocation is the process of selecting a mix of asset classes that closely matches an investor’s financial profile in terms of their investment preferences and tolerance for risk. It is based on the premise that the different asset classes have varying cycles of performance, and that by investing in multiple classes, the overall investment returns will be more stable and less susceptible to adverse movements in any one class.

All investments involve some combination of risk, be they market risk, interest rate risk, inflation risk, liquidity risk or tax risk. An individualized asset allocation strategy seeks to mitigate the risks of any one asset class though diversification and balance. Asset allocation does not ensure a profit or protect against a loss.

Fee-Based Guidance

We conduct our Investment Management Services through LPL Financial’s Strategic Asset Management platform, we work under a fee-based model. Fee-based asset management allows us to share a common goal with you: to grow the value of your assets. A holistic approach to investing, fee-based asset management ties our compensation directly to the performance of your account. Instead of commissions, we earn an annual fee based on the market value of the account.1 This allows us to concentrate on what matters most—building an investment portfolio that seeks to address your specific needs.

Ongoing Advice and Oversight

As a fiduciary (when providing Advisory services) under the Investment Advisers Act of 1940, we are obligated to act in your best interest and provide you with full and fair disclosure of material conflicts of interest. In a Strategic Asset Management account, we monitor your investment portfolio on an ongoing basis and continue to offer you advice as needed. These services may be provided on a discretionary basis, which means you don’t need to direct us to make trades, rebalance your portfolio, or make other investment decisions for your account. This discretionary trading capability in a Strategic Asset Management account gives us the ability to react to changes in economic conditions on your behalf.

 

An Evolving Strategy

A sound asset allocation strategy includes periodic reviews.

About the only certainty when it comes to the financial markets is that they will change, and so will your financial situation. Through market gains and losses, a portfolio can become unbalanced and it may be important to make adjustments to your allocation. As people move through life’s stages their needs, preferences, priorities and risk tolerance change and so too must their asset allocation strategy.

Asset allocation, which is driven by complex mathematical models, should not be confused with the much simpler concept of diversification. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.