Do You Have a Financial Strategy ?


Do you have a financial strategy?

Do you have a comprehensive plan that will take you where you want to go?

Without a strategy, without a roadmap in place before capital is committed, an investor is asking for trouble.

  • Does your strategy fully reflect current and future income needs?
  • Liquidity requirements and cash flow realities?
  • Obligations to family?
  • Long term philanthropic goals?
  • Is the investment time horizon carefully defined and is that horizon aligned with market risk?

Financial markets are dangerous places for the unprepared.

It is remarkable how many people who have achieved tremendous success in their lives and their careers—achievements that usually include substantial doses of homework, planning, and hard work—don’t give themselves the relatively small amount of time to put a sound financial strategy in place.

The good news is that with a little time upfront and the services of an independent advisor, even the very busy entrepreneur, manager, or professional can create and implement a wealth management program. The best news is that a well-designed program with periodic reviews is durable and imposes very limited burdens on the client.

Please contact Palmerston for a no-obligation consultation.

The key element is to work with a client to build a wealth management program that is comprehensive and customized, yet adaptable enough to meet changing circumstances.

Palmerston Group builds strategies and portfolios for its clients using the Margin of Safety. The process is comprised of three steps and is quite straightforward:

1. The Financial Checkup: Getting the Information Flowing in Both Directions | An advisor needs to listen carefully to the client about financial needs and objectives. Doing a financial checkup provides necessary information about current and future financial commitments. Those needs run the gamut, from saving for a child’s college education to preparing for retirement. We, in turn, need to provide information about Palmerston Group’s services, approach, fee structures, etc., as well as answer any questions a client may have. A thorough, structured exchange—anchored by a lot of listening at our end—is the foundation for developing a comprehensive financial strategy. This conversation or series of conversations can occur, depending on the client’s preference, in person or on the phone.

2. Planning and Asset Allocation After analyzing the situation, and working with the client, Palmerston Group develops a first version of a plan, including a proposal for asset allocation. Every client is unique and the allocation of wealth among asset classes must reflect that uniqueness. Attention is focused on the existing financial circumstances as well as future scenarios. Time horizons are critical. What Warren Buffett calls getting rich slowly requires the financial strength to wait out a hostile market. How the allocation pie gets cut is determined in significant part by the relative ability of an investor to wait it out. Asset allocation also needs to reflect the requirements of the present, where cash and cash-like securities can meet immediate commitments, or be available as new investment opportunities appear in the marketplace.

However, if cash is king in the present, invested capital, compounding tax-free, rules the future. Almost all investors have long-term objectives, so asset allocation architecture also should seek maximum room for wealth creation.

3. Specific Selections Within each asset class, Palmerston Group will make specific recommendations and explain our reasons for doing so. This is where the Margin of Safety approach will be most evident. Ensuring appropriate diversification within each segment is essential, whether Palmerston is selecting individual securities or managers or a combination of the two. Good investment ideas are rare. For that reason, a client’s total portfolio should have the benefit of at least several outstanding managers (via mutual funds or managed accounts) who have proven themselves in both challenging markets and over an extended period. Many within this very small, very elite club use some kind of “discount to intrinsic value” system, though what they buy varies enormously.

It makes sense for an advisor to assemble on behalf of a client a strong, “virtual” team of managers who are dedicated Margin of Safety practitioners, yet whose distinctive quests for discrepancies between value and price take them all over the investment map. Please feel welcome to contact us and we’ll be happy to discuss this and other aspects of Palmerston Group’s investment advisory services.

Finally, throughout both asset allocation and specific selections, advisor and client need to review and fine-tune the portfolio strategy. The process often serves to further clarify a client’s priorities. Making adjustments along the way to reflect a client’s greater financial self-understanding is part of the Palmerston Group method for getting it right. When the client’s customized strategy is in place, Palmerston builds the portfolio. Please contact Palmerston for a no-obligation consultation.