At Trott Brook Financial, we strive to go far and beyond the typical firm in respect to the research and due diligence put forth in providing investment advice. We begin the process of devising an investment recommendation by understanding our client’s goals and timeframe. These two factors are important in any investment. They immediately eliminate or open the door to a host of investment opportunities for each client.
Once a client’s goals and timeframe are established, the process of individual product/security selection begins. In other words, this is when we begin to decide on the specific investments that will make up the individual components of the portfolio.
Our role is not unlike the job of your family physician. Often times a large part of a doctor’s role can be determining the diagnosis and working as an intermediary between the specialist(s) and the patient. Like the general practitioner, our job is to help translate complex ideas into language the client understands while at the same time evaluating and being conscious of how a financial product or strategy impacts one’s overall financial “health.”
The money manager, or “specialist,” has a very narrow area of expertise as it relates to the client. For example, like the general practitioner who is not a coronary expert or optometrist, we, as the financial advisor, do not pretend to know what individual company in China is going to be the next Google. What we will do however, like the general practitioner recommending a heart specialist for example, is align our clients with money managers who we believe are the best “specialists” for a particular region or asset class that makes sense for a particular portfolio.
When identifying specific money managers, there are literally reams of data, statistics and independent research one can review. Though many factors are important, we place the heaviest weight on the following criteria:
- Managers with a sound investment philosophy and process we understand.
- A tenured manager who has a long-term track record, preferably ten or more years, that demonstrates an ability to successfully implement their strategies through various economic and market cycles.
- Shareholder oriented managers. In other words, we look for money managers with a sizeable stake of their own money invested in the fund they manage.
Another thing we ask ourselves when designing a portfolio is if we were in the client’s shoes, would we be happy with the manager(s) we’re suggesting?
In addition, from time to time we won’t be able to identify a money manager who oversees an asset class we like. The person we’re looking for may not exist, or in other cases we may simply feel that active management would provide little to no extra value to our clients. In these instances we will generally opt for an investment that seeks to capture the average market return of a specific class of assets.
In summary, at Trott Brook Financial we strive to go above and beyond the industry norm when it comes to investment research. It is important for clients to recognize that the advisor’s main role in portfolio construction is akin to the general practitioner. Like the general practitioner who doesn’t practice brain surgery, we seldom make suggestions to own individual stocks, bonds, etc.
Our main focus is aligning our clients’ portfolios with money managers who specialize in areas that make the most sense for their particular circumstances. We believe the criteria we use in selecting managers puts clients in a position to work toward their investment goals over time.