At Trilogy Wealth Advisors our approach to asset management services is based on a core philosophy that “Return in absolute terms means nothing without the context of Risk.” Often we hear individuals talk about their returns (or lack thereof) but they never mention what level of risk they took to achieve said return.
Risk and the management of that risk is also the driving force behind our portfolio strategy. In summary, our portfolios reflect our belief that:
- Markowitz Portfolio Theory is a solid foundation upon which to build consistent portfolio performance;
- Portfolio Risk is a key measure of a portfolio’s return, not just the absolute return. In other words, achieving a similar return while taking half the risk is deemed a preferable return in comparison;
- Demographics trends can provide a long-term view of the potential of certain markets and can assist in developing sector weighting strategies that may lower risk and/or enhance return;
- A Contrarian approach to sector and asset selection can offer greater value;
- History and research show that diversification, including international investing, can reduce risk and increase return over time.
At Trilogy Wealth Advisors, we use a multi-disciplined approach to selecting investment tools that meet the specific needs of each client. As mentioned previously, the management of portfolio risk, relative to the return needed for the individual client, is a key driver for decision making during portfolio construction. In general terms, we can group client needs into three categories:
- Consistent Income Needs – for this client, receiving consistent income and cash flow from the portfolio is of utmost importance, superseding even returns. A significant drop in market value cannot be tolerated, even if short lived. For this client, investment solutions that include underlying rate guarantees and living benefits would be most appropriate. These solutions tend to increase the overall internal cost of the portfolio, and limit the upside potential for growth, but can deliver peace-of-mind in turbulent market conditions.
- Long Term Asset Accumulation Planning – for this client, consistent contributions to a growth-oriented portfolio is key to developing a future nest egg from which supplemental retirement income can be drawn. Small investment amounts, accumulated over time can have an amazing compounding effect – whether invested through an employer sponsored plan, or through a portfolio established by the client. Professionally managed investment vehicles with good growth potential are generally most appropriate here and can be established with smaller investment amounts and opportunities for direct deposits from checking or savings accounts.
- Customized Portfolio Management – for this client, a more comprehensive wealth management approach is desired. Analysis of cash-flow, debt, insurance, and estate structure are all taken into account during a long-range wealth planning process. Utilizing indexing through Exchange Traded Funds (ETFs), our customized portfolios offer greater sector and asset control, heightened tax efficiency, lower internal costs, and intra-day trading capacity.
It’s important to note that a combination of these solutions may be the best fit for the different needs of clients. Cost, risk, potential return, potential loss, time frame, and customer needs all play a role in designing the right wealth management solution for your personal wealth journey.
