As part of our Financial Planning Process, we work with our clients to determine how best to coordinate their investment planning, strategies, and decision-making with their overall financial plan.  With that in mind, we follow the process below.


Setting Goals and Objectives

Decisions of how, where, and what to invest in should be coordinated with your long-term goals and objectives.  How can you determine if an investment, investment strategy, and overall portfolio allocation make sense if you don’t coordinate it with your goals and financial plan. 

Determine Overall Goals and Objectives: 

We work with you to help write out and both quantify and qualify your financial planning objectives (Estate, Business, Investment, Retirement, Tax, and Legacy Planning).

Financial Planning Projections: 

Our financial planning process projects your estate growth while accounting for cash flow and taxes (estate and income taxes).  With that in mind we can determine:

  • Accumulation:  How much you need to accumulate.
  • What You Need to Earn:  We look at your return needs – targeted rates of return and also your minimum rate of return needed that we call your “hurdle rate
  • Stress Test of Plan:  We use various “what if” scenarios and Monte Carlo stress testing to better determine an “optimal” overall asset allocation between stocks, bonds, cash, private deals and other investments.
  • Tax Allocation:  How much you may want to contribute and accumulate in various types of investment accounts – IRA, Roth IRA, Business Qualified Plans like 401ks and Defined Benefit plan along with traditional investment accounts.
  • Gifting/Giving:  With this information, we can help you determine if you need and/or are able to consider various gifting strategies to family (and to better protect your wealth with the use of entities – such as trusts or partnerships. and/or charitable giving strategies (we have annual updates on strategies to consider – here was our 2020 Year-end Planning Checklist).
  • Determination of Overall Asset Allocation:  All of this planning helps us work with you to determine your overall asset allocation on how best to allocate your funds and deploy new cash into your portfolio with a plan vs. being “reactive” when you have cash to invest.

Creation of Investment Policy Statement (IPS)

With the information above, we can work with you to draft and create an overall investment policy statement that will set up the allocation, framework, benchmarks, and other areas to keep you and your investment advisors accountable.  While creating this IPS, we consider:

  • Responsible Parties:  We determine which parties are responsible for which decisions in the portfolio construction, allocation, and monitoring. 
  • Overall Return and Risk Objective:  It is in this area where we write out the overall objectives of the portfolio.  Determine the allocation and tolerances, and discuss many other considerations discussed above such as taxes, trading, expenses, etc.  The allocation must also be allocated and managed so you can “sleep at night”.  So we make sure that you understand the risk and returns that you are considering given the allocations and strategies you want to deploy and help you understand how your past and current investment biases may be impacting your investment strategy.  Many of our clients don’t like riding the stock market “roller coaster”.
  • Liquidity and Cash Flow Needs:  We also must consider if any liquidity and/or cash flow needs are required from the overall portfolio.
  • Prohibited Investments: Many times, for personal, regulatory, or faith-based reasons, a client does not want to invest in a certain area of the market, this will be framed in the IPS.
  • Benchmarks:  We determine how we will benchmark the portions of and the overall portfolio.  We tend to use traditional and available benchmarks.
  • Accountability and Reporting:  We determine how often any advisor must report, how they should report, and what the report must contain for overall review and accountability.  In addition to these reports, the advisor will be required to present periodically (quarterly, semi-annually, etc.) to the client and team as desired.

Review of Current Portfolio vs. IPS

Once the IPS is written we review the existing portfolio to determine if it is in compliance and/or any other concerns we may have.  With that, we use tools such as Morningstar Workstation, Bloomberg, and other tools we have available through Avidian to analyze your current portfolio.

  • Allocation:  Is the overall current allocation aligned with your IPS?
  • Structure and Holdings:  Are the current holding in your portfolio diversified and have they performed well in the last several years?
  • Performance vs. Benchmarks:  Are your current managers performing from a risk-return standpoint to their IPS benchmarks?
  • Tax and other Factors:  If you have multiple “buckets” is your overall portfolio, are they well allocated from a strategy and tax perspective? If a tax return is filed, the sooner the family can rely on the estate planning assumptions and strategies.  
  • ESOP (or Sale to Employees):  If you want to sell in the form of an ESOP, this will typically take 1-3 years minimum to complete.

Informed Decision Maker with a Plan

With the above information, our goal is to allow you to determine (with our help and guidance as needed) if your current plan is optimized per your Investment Policy Statement.  Once we have that in mind, we can make the following decisions:

  • Advisor Strategies:  Do your current advisors offer all strategies you need in terms of diversification in the stock and bond markets in addition to other investment areas such as private deals and other non-traditional strategies (hedging/hedge funds are an example).
  • Advisors Needed:  Are your current advisors adequate and/or desired going forward.  This will be a decision to keep current advisors, add new advisors and/or strategists.
  • Advisor Focus:  After reviewing and talking with current and new advisors, it is important to determine what areas they will handle – will you give them a broad allocation responsibility or something more specific such as a US Equity Manager?  Once that is determined that advisor team will be given a specific IPS that they will be accountable to and on which they will report to you.
  • Additional Advisors Needed:  If your existing investment advisors cannot assist in all areas (and or if you want additional strategy diversification), we can assist directly or help you find and/or interview advisors to add to the team.

Ongoing Portfolio Oversight by Avidian Team

So, how do we help going forward?

  • Framework:  We will work with you and your advisors to determine what is needed to be shared with you and with us and in what frequency.  Where possible (and it is optimal that they can), they will provide us quarterly reporting that shows holdings, allocations, performance vs. benchmarks, and other information to show that they are in compliance with their mandate.
  • Avidian Review:  We will review these reports and use some of our internal tools to review and give you our feedback.
  • Advisor Meetings:  We will (typically virtually) attend most of your meetings with your selected investment advisors to be able to aid in the conversation to help assure accountability in their ideas, discipline, and performance.
  • Annual Review:  We will have annual meetings with you to have an overall review and analysis of the IPS, strategies, and manage teams to determine what if any changes are needed.