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Investment Management

GFM's approach to investment management emphasizes the tight integration of investing with financial planning; this is because for most people investing is a means, not an end, to achieve goals which are best reflected in a financial plan.  Accordingly, each client's investment strategy is developed optimally by stress-testing alternative investment strategies within the context of that client's unique financial circumstances and, during implementation, investment performance is monitored in light of client goals codified in the financial plan.  GFM's investment process involves these key steps, consistent with investment fiduciary practice, in constructing individualized, very low-cost and globally diversified portfolios based upon  modern portfolio theory and practice:

*Knowing the client’s unique financial situation and goals
*Appropriately diversifying assets to the specific risk/return profile of each client
*Preparing a specific investment policy statement
*Using prudent experts to invest funds pursuant to the client’s investment policy statement
*Accounting for and controlling investment expenses
*Continuously measuring performance relative to goals as well as taking corrective action

*Avoiding conflicts of interest and prohibited transactions

 

 

 

 

Investment Management Options

Grossman
Financial
Management
Self (DIY) Stock Broker
Process
Investment Plan Quality and Thoroughness high low low
Continuous Management of Investments to Plan yes unlikely no
Manage Your Investments at Any Broker/Custodian You Select yes yes no
Personalized and Attentive Service high 24/7 medium
Standards of Accredited Investment Fiduciary yes no no
Compensated by Client Only yes n/a no
Reporting Quality
Measure Investment Performance high poor medium
Measure Performance Relative to Markets high poor poor
Measure Performance Relative to Client's Goals high poor poor
Accounting of Investment Expenses high poor poor
Financial Planning Integration
Standards of Certified Financial Planner yes no unlikely
Investment & Financial Plans Integrated yes no no
Investment & Financial Plans Updated yes no no
Coordination with Client's Tax, Legal & other Advisors yes no unlikely

Investment Management Services:  Value Estimates & Indicators

 

The following are estimates or indicators of the potential value of investment management services on annual investment returns.  The sources of the estimates are publications from Vanguard, Morningstar, John C. Bogle, Standard and Poor’s, The White House Council of Economic Advisors, and others; links to the sources are provided.

 

 

      Investment management, behavioral coaching  up to 1.5%

https://advisors.vanguard.com/iwe/pdf/ISGQVAA.pdf?cbdForceDomain=true

http://corporate.morningstar.com/euconf3/presentations/David%20Blanchett,%20Morningstar.pdf

https://corp.financialengines.com/employers/FinancialEngines-2014-Help-Report.pdf

 

      Tax, efficient asset location  up to 0.8%

https://advisors.vanguard.com/iwe/pdf/ISGQVAA.pdf?cbdForceDomain=true

http://corporate.morningstar.com/euconf3/presentations/David%20Blanchett,%20Morningstar.pdf

 

      Rebalancing portfolio systematically  up to 0.4%

https://advisors.vanguard.com/iwe/pdf/ISGQVAA.pdf?cbdForceDomain=true

http://corporate.morningstar.com/euconf3/presentations/David%20Blanchett,%20Morningstar.pdf

 

      Tax, harvesting  up to 0.3%

https://www.betterment.com/resources/research/tax-loss-harvesting-white-paper/

http://corporate.morningstar.com/euconf3/presentations/David%20Blanchett,%20Morningstar.pdf

 

      Tax, withdrawal order  up to 0.8%

https://advisors.vanguard.com/iwe/pdf/ISGQVAA.pdf?cbdForceDomain=true

http://corporate.morningstar.com/euconf3/presentations/David%20Blanchett,%20Morningstar.pdf

 

      Not “conflicted advice” – avoid underperformance  up to -1.0%

https://www.whitehouse.gov/sites/default/files/docs/cea_coi_report_final.pdf

 

      Inexpensive investment vehicles – avoid costs  up to -1.1%

https://www.whitehouse.gov/sites/default/files/docs/cea_coi_report_final.pdf

 

      Investment Timing - avoid underperformance  up to -0.8% to – 2.3%

The Clash of Cultures:  Investment vs. Speculation, John C. Bogle, 2013

"The Arithmetic of "All-In" Investment Expenses", Financial Analysts Journal, Jan-Feb 2014

https://personal.vanguard.com/us/insights/article/mutual-fund-returns-082014

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2560434

http://www.morningstar.com/advisor/t/70540275/mind-the-gap-why-investors-lag-funds.htm

http://news.morningstar.com/articlenet/article.aspx?id=637022

https://advisors.vanguard.com/iwe/pdf/ISGIDX.pdf?cbdForceDomain=true

https://advisors.vanguard.com/VGApp/iip/site/advisor/researchcommentary/article/IWE_InvResCaseIndexing

http://us.spindices.com/resource-center/thought-leadership/spiva/

https://advisors.vanguard.com/iwe/pdf/ISGQVAA.pdf?cbdForceDomain=true

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2560434  "Timing Poorly: A Guide to Generating Poor Returns While Investing in Successful Strategies"; Jason Hsu, Brett W. Myer, Ryan Whitby, July 2014

 

 

source: Hsu, Myer, Whitby, "Timing Poorly"

 

source: John C. Bogle, Clash of Cultures

source: Vanguard, 2014 https://advisors.vanguard.com/iwe/pdf/ISGQVAA.pdf?cbdForceDomain=true

source:  Morningstar

source:  Morningstar

 

source:  Vanguard, 2015  https://advisors.vanguard.com/iwe/pdf/ISGIDX.pdf?cbdForceDomain=true

 

source:  Bogle, 2014

 

source: https://corp.financialengines.com/employers/FinancialEngines-2014-Help-Report.pdf

 

 

 

 

Introduction to the Investment Process

 

Grossman Financial Management
560 First Street, Suite B-203  
Benicia,  CA 94510
Tel: (707)
745-8756   Fax: (707) 745-8723
E-mail: 
info@grossmanfinancial.com


DISCLAIMER: The Company only transacts business in states where it is properly registered, or excluded or exempted from registration requirements.  Past performance may not be indicative of future results.  Therefore, no current or prospective client should assume that the future performance of any specific investment, investment strategy (including the investments and/or investment strategies recommended and/or purchased by adviser), or product made reference to directly or indirectly on this Website, or indirectly via link to any unaffiliated third-party Website, will be profitable or equal to corresponding indicated performance levels.  Different types of investment involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a client’s investment portfolio.  No client or prospective client should assume that any information presented and/or made available on this Website serves as the receipt of, or a substitute for, personalized individual advice from the adviser or any other investment professional.  Historical performance results for investment indexes and/or categories generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment-management fee, the incurrence of which would have [the] effect of decreasing historical performance results.  This web-site is for informational purposes only, and does not constitute a complete description of our investment services or performance. This web-site is in no way a solicitation or offer to sell securities or investment advisory services, except in the state of California, where we are registered, or where an exemption or exclusion from such registration exists. Information throughout this site, whether stock quotes, charts, articles, or any other statements regarding market or other financial information, is obtained from sources which we, and our suppliers, believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Nothing on this web-site should be interpreted to state or imply that past results are an indication of future performance. Neither we, nor our information providers, shall be liable for any errors or inaccuracies, regardless of cause, or the lack of timeliness of, or for any delay or interruption in the transmission thereof to the user. There are no warranties, expressed or implied, as to accuracy, completeness, or results obtained from any information posted on this or any linked web-site.