Model Behavior

By The Advocates

Our five model allocations utilize increasing percentages of growth securities as you move from model one to model five. They’re designed to incrementally increase aggressiveness in order to suit a variety of client needs. At onboarding, or in the wake of a life event, we’ll help you select the most appropriate model for your family.

Finding your model is a two-part process of determining what you need and what you can handle, then finding alignment between the two. The first and easier part is finding your tolerance for market fluctuations.

If we believe that discipline determines your level of success (and we do), then we’re going to ask that you pick a seat and stay in it, no matter how much you want to move. Consider your reaction as an investor in 2008-2009. How’d you do?  How about during COVID? Your answers are a strong indicator of your reaction to future market turbulence and a great way to help us know which of our five seats you would find comfortable.

The second part is all about that financial plan. Assuming you’ve crafted a vision for your future and we’re backing in the goals to get you there, what do you need to achieve your vision? And where are you now? How much time do you have to move the needle? The answers provide your risk capacity.

When tolerance and capacity are in sync, model selection is simple. When they’re not, it’s a different story. That’s what usually produces our allocation outliers. If you insist on a more aggressive model because you think you can tolerate more that your contextual capacity, we’ll let you. But you’ll have to sign a form explaining the disparity. Seriously, this is one of the scarier scenarios we face because it has the highest potential for high impact loss.

The reverse is slightly less scary because inordinately conservative portfolios don’t have high potential for losses. They do, however, carry the risk of lost potential and a failed plan. Without a strong enough growth component, a client is more likely to fall short of their vision. We don’t like that.

Investments can lose value, all of them. Markets are unpredictable, no one knows what’s going to happen. We can’t change that. We can give you a proper allocation that is based on your needs, good data, and objectivity. And that’s a great place to start.

If you’re curious what we’d recommend for you, give us a shout.