Managing capital markets portfolio risk is paramount in how our group, preserves, accumulates and monitors clients' financial assets and liabilities. We seek this through our “Balancing the Balance Sheet” approach which designs asset/liability modeled strategies aimed to achieve clients’ growth and/or cash flow needs while proportionately reducing their downside risk exposure.
Our portfolio construction methodology is designed around your Liability Derived index™, known as your LDi™, which fully embraces Post Modern Portfolio Theory (PMPT) beliefs. This LDi™ methodology also considers components of “Conditioned Value at Risk” – “CVaR” framework. Both integrate PMPT work of three Nobel Prize Laureates (Markowitz, Sharpe & Kahneman) and other renowned Academics. The LDi™ process using the CVaR framework is more robust and effective at managing downside risk than a Modern Portfolio Theory Mean Variance framework prevalent as today's industry standard.
LDi™ portfolio construction, through PMPT style analysis, recognizes the fact that most active managers are not 100% style pure as industry labeled. This style deviation is for various valid reasons in their attempt to beat their style benchmarks. However, their portfolio's actual underlying style blends should be identified and accounted for when implementing their active management into the recommended asset allocation solution set of a portfolio construct. LDi™ portfolio construction uses “style pure” indices to accomplish these extra steps and to achieve:
- Enhanced asset allocation optimization using mutually exclusive and exhaustive style pure indices
- More accurate active manager skill evaluation to better identify active managers' added value
- Greater assurance of intended asset allocation adherence when blending active managers with passive indices
These extra steps and better procedures create better built portfolios with greater PMPT integrity. Better built portfolios linked to meeting investors' growth and/or cash flow needs, as opposed to beating arbitrary market indices is a process designed to enhance financial outcomes for obtaining investors' goals. Request the Liability Derived index™ – LDi™ white paper for a more detailed explanation.
Your Liability Derived index™ portfolio construction focus begins with identifying the investor’s LDi™ calculation. The LDi™ calculation links the investor’s assets to their cash flow liabilities or financial goals. We believe these PMPT advancements and the LDi™ calculation is a better method for designing suitable portfolios. The LDi™ defines investors’ income, inflation protection, growth and liquidity needs while also monitoring portfolio risk on an ongoing dynamic basis. The LDi™ calculation is also an event driven discipline responsive to capital markets and/or investor circumstantial change(s). These events driven investing considerations are designed to help avoid emotional hazards of market timing and other potentially destructive investment decisions.
LDi™ has the power to dramatically increase investors' confidence and financial goal achievement success. These tools, combined with HighTower's open architecture, empowers our group to provide customized strategies that are objective, unbiased, and transparent for each client’s unique financial circumstances. HighTower enables our group's to effectively address the “Balancing the Balance Sheet” approach and full fiduciary standard on behalf of our institutional and private clients alike.
- Why is Conditioned Value at Risk - CVaR framework better?
These PMPT techniques are better designed to minimize investing uncertainty by integrating many Post Modern Portfolio Theory (PMPT) advancements into the portfolio construction process.
- What are these PMPT advancements? (* Nobel Prize Laureates)
All the above empirical evidence tested by Dr. Frank Sortino (Pension Research Institute)
- - Mean Variance Risk Return Framework (albeit refined)- Harry Markowitz*
- - Returns-Based Style Analysis - William F. Sharpe* (Stanford University)
- - Bootstrap Method - Bradley Efron (Stanford University)
- - Three (3) Parameter Lognormal Distribution - Aitchison/Brown (Cambridge University)
- - Downside - Risk Peter Fishburn (University of Pennsylvania)
- - Upside Potential - Daniel Kahneman* (Princeton University)
- - Conditioned Value at Risk - CVaR
- How does this make LDi™ different from Modern Portfolio Theories (MPT) mean variance optimization?
The following beliefs differentiate the investing approach of LDi™ philosophy and portfolio construction process.
- - The Goal is to Achieve Your Liability Derived index™ - LDi™.
This explicit LDi™ identifies where every Investor needs to be to achieve their financial goal.
- - All Volatility Should Not be Treated Equally.
Upside volatility is good and downside volatility is bad (this isn't the case in a Mean Variance framework).
- - Active Money Managers are a Blend of Styles.
Active management results in style blends and must be measured to avoid corrupting the asset allocation.
- - Identifying Investor’s LDi™ is Essential for Meeting Their Financial Goal.
Different needs, different portfolios - risk tolerance questionnaires ignore the Investor’s LDi™.
- - Event Driven Investing is Used to Adjust Your Asset Liability index™.
Capital markets and peoples circumstance change and so must their LDi™ portfolio. This removes the emotional hazards of market timing and other potentially destructive investment decisions.
- What’s your LDi™? Will you find it today or too late?
- - Please contact us at your earliest convenience to schedule a call, Webinar or meeting.
Our value proposition is “Transforming Complex Challenges into Practical Strategies”. It is our goal to deliver this proposition with an institutional, yet personalized, level of service resulting in an ultra-concierge-like experience. Our Fiduciary Advisors seeks to solve the most complex client issues resulting in what we believe to be a mutually rewarding client experience.
Our core principle is a “Full Fiduciary Standard of Best Practices”. We literally wrote a manual in collaboration with the Center for Fiduciary Studies which serves as our Code of Ethics and Best Practices guide. Copies are available upon request. All our Advisors have successfully completed the Accredited Investment Fiduciary™ (AIF) program, conducted by the Center for Fiduciary Studies, an internationally recognized training organization for fiduciaries. We are committed to the highest standards of transparency and full disclosure in all aspects of our advice. We refer to this conduct as our code of Ethicacy™. We define Ethicacy™ as the blend of Efficacy and Ethics:
- Efficacy- effective, efficient, useful, worth, value
- Ethics- moral, principled, right, fair, decent, just
Your Access / Our Partnership in HighTower's Multiple Global Resources
Our group has access to the multiple global resources of HighTower Advisors, and independent Registered Investment Advisory firm. All HighTower's resources are made available through Our Fiduciary Advisors' on a tailored individualized access basis. Our resources, capabilities, and value proposition offer a distinct client experience resulting in being a primary destination for the more sophisticated private and institutional clientele. Our resources are designed to organize, consolidate and transform complex challenges into practical strategies. HighTower multiple global resources, combined with our disciplined “Balancing the Balance Sheet” approach provides you a prudent process for the management of your assets, liabilities and related matters. Your endeavors, combined with our resources, harness the mechanism to leverage your time, talent and skills which can allow you to capitalize on other opportunities or preferred activities. This unique open source platform and fully open-architecture flexibility allows us to nimbly make non-affiliated recommendations totally free from conflicts of interest. Our fiduciary investment advice is completely objective and unbiased.
Our Pricing Philosophy & Policy
We believe in one pricing schedule for advice regardless of the underlying investment blend. This philosophy positions our advice to be unbiased and conflict free. We transparently price our services based on your unique assignment with full fee disclosure because it is the ethical way to conduct business. We have nothing to conceal because our level of service and advice is unrivaled and an attractive value when comparative fees are fully revealed and understood. Our group, through HighTower's infrastructure, has the ability to select independent custodians, technology platforms, research resources to serve our clients' best interest first and foremost on a price competitive basis. In other words, when multiple vendors compete, clients win on all product and service levels without constraint to a “pre-set” product list, firm mark-up fees or principle trading or product inventory. Please feel free to request our Curriculum Vitae for details.