Gartzman Financial Advisors

Investment Philosphy

Investment Management

We follow a well-defined, time-proven process that optimizes your portfolio to give you the maximum return for a given amount of risk, thereby, giving you the greatest probability of achieving your financial goals.

Your portfolio strategy begins with a personalized investment analysis, and graduates through the portfolio construction process in which multiple asset classes, investment styles and specialist money managers are combined to meet your investment objectives.

Our asset management process is modeled after the disciplined approach used by institutional money managers. We designed our five-step process to respond to your individual needs and the dynamics of the capital markets.

Step 1: Determine your risk profile and objective

Step 2: Set your asset allocation policy

Step 3: Diversify across asset classes and investment styles

Step 4: Rebalance your portfolio

Step 5: Report the results

Determine your risk profile and investment objectives.

Every investor is an individual, with different needs and different objectives. Whether your objective is wealth preservation, asset growth, current income or minimizing taxes, it is critical to discuss them in detail with a knowledgeable investment professional. We will help you determine whether you need investments that produce income, growth or a combination of both. Your investment objectives will also help define your investment time horizon and risk profile.

It is also important to understand your attitude towards investing. The amount of risk or variability of return you are willing to accept is a major determinant of your portfolio composition. Another critical aspect of your risk profile is your investment time horizon, when you need access to your investments seriously affects your portfolio strategy. An investor with a longer time horizon can afford to assume greater short-term risk in exchange for potentially greater long-term returns. Stocks historically have experienced greater short-term volatility, but over the longer term, they have outperformed bonds and other fixed income investments. If you have a longer time horizon, you may want to take advantage of the opportunities provided by investing in stocks. In addition, regardless of the type of assets held in your portfolio, time is on your side. The longer you hold any particular asset class, the less the variation in your return.

Set your asset allocation policy.

Research has shown that the asset allocation decision — how your investments are spread among multiple asset classes such as stocks, bonds, and cash — has by far the most significant impact on overall performance. Over 90% of the variation in returns are due to the asset allocation of investments in a portfolio. In comparison, market timing and stock selection make little difference. This is why determining the right asset allocation policy is critical to your investment success.

We develop diversified portfolios with varying risk/return profiles from very conservative to very aggressive. Based on your investment objectives, time horizon, and investment risk profile, we will design an asset allocation policy that meets your particular needs.

Diversify across asset classes and styles.

Once your asset allocation policy has been developed, we diversify your investment portfolio across several asset classes and investment styles by using multiple specialty money managers.

We utilize some of the finest and most reputable money managers in the country. These managers are carefully selected and continually monitored. Each manager is a specialist in his or her particular investment style. Many of the mangers we use are not available to individual investors and because of our institutional relationship, we able to acquire their services at significantly reduced costs and pass the saving on to you.

Our manager selection process begins with an extensive database screening process. After the initial screen is complete we conduct further quantitative and qualitative research, and only those managers whose investment philosophy and past performance meet our rigid standards are chosen. Once selected, we continually monitor the portfolios and the managers to ensure that their investment style and performance remain consistent with their respective objectives.

Multiple Manager Approach

Your portfolio is diversified by utilizing multiple specialist managers combined in a “style-neutral” approach. For example, the U.S. stock portion of your portfolio is diversified by blending four mutually exclusive equity styles — large company growth stocks, large company value stocks, small company growth stocks, and finally, small company value stocks. Furthermore, several distinct sub-styles have been identified within each of the four equity styles. Therefore, often two or more money managers will be hired to manage the sub-styles by contributing their own highly specialized investment expertise. The benefit of this approach is improved performance with reduced volatility. A style-neutral approach eliminates the virtually impossible task of attempting to forecast which style of equity investing will be in favor at any point in time.

The worldview can no longer be limited to an exclusively American perspective. Allocating a portion of assets to international stocks and fixed income investments further diversifies your portfolio. Since research has shown that there is a low correlation between the return of international stocks and domestic stocks, the combination of the two has a favorable effect on the risk/return relationship of a portfolio. Investing up to 30% of your portfolio’s equity position in international equities can reduce your portfolio’s overall risk and can improve its return.

Diversifying your portfolio by asset class, manager style, sub-style and sector tends to reduce risk while improving the prospects for long-term growth.

Rebalance your portfolio.

Rebalancing is a disciplined method of ensuring the proper allocations to each asset class in your portfolio while adding the benefit of a built-in “sell high, buy low” strategy.

To control risk, we incorporate a formal rebalancing program. Rebalancing maintains the asset class exposure within the specifically defined boundaries of your asset allocation policy. Without a rebalancing feature, the mix of assets in your portfolio may become inconsistent with your asset allocation policy. This can occur over time as different asset classes increase or decrease in value with shifting market conditions, and can lead to unplanned over or under exposure to certain asset classes. Rebalancing ensures that your portfolio is being managed in a manner consistent with your designated asset allocation policy.

Report the results.

Diligent account monitoring is an integral part of our investment services. Tracking your results allows you to measure the progress against your stated objectives and provides us the opportunity to discuss the management of your portfolio and any changes in your financial situation. We provide you with everything you need to fully understand the progress being made in your portfolio.

As our client, you will receive a comprehensive reporting package. It includes monthly account statements, quarterly performance reports, and a detailed annual tax report.
The account statements track the activity of your investments and provide a clear picture of how your assets are invested. A quarterly performance report provides an in-depth analysis of your portfolio’s return and allows you to measure your progress against your goals.

At year-end, we will provide an organized tax-report that summarizes year-to-date totals for both short- and long-term capital gains and dividends to assist in your tax preparation.

Most importantly, we are here to provide you with the highest level of personalized service, whether it’s reviewing the status of your account or consulting with us on any matter of concern to you.