Our investing philosophy is straightforward. Diversification reduces risk, and simple beats complex.

At the core of all portfolios are low cost funds giving us exposure that’s globally diversified across asset classes, market-caps, and risk factors. Rather than swinging for the fences, we aim to fully capture what the market is giving us in the most tax-efficient way possible. The evidence is clear that investing this way leads to better outcomes over time.

Most advisors focus on risk tolerance, but for us a more important metric is risk capacity. What effect would a certain kind of allocation, or a downturn in markets, have on your ability to reach your goals? Because that is really the reason you are investing, and why the risk you have in embedded in your portfolio has to be quantified in this manner. Our clients learn that a drawdown in their investments in a given year isn’t risk, it’s a common occurrence. Finding out you can’t retire when you planned to is the real risk.

Once the allocation is set, the client receives an Investment Policy Statement. This recaps the portfolio objective, investments in the portfolio, how they’re allocated, and expected returns going forward. But most importantly, in includes stress tests, quantifying in dollar terms what could happen during the depths of a bear market. Once they know it’s a possibility, and have prepared for it, it becomes much easier to stay the course.