Envision Asset Management is a Registered Investment Advisor in Plantation, Florida. We provide high-level investment services for corporate executives, professionals, business owners, retirees, and others. Our aim is to preserve and to build your wealth by managing risk and optimizing returns. Our only loyalty is to you, our client, and we provide full disclosure for any potential conflicts. We operate on a fee-only basis and act as a fiduciary, that means we always put our clients’ interests first.
We, in effect, become your personal Chief Financial Officer. In addition to building an investment plan, we can assist with planning for retirement, education, budgets, insurance, estates, small business, loans, banking, taxes, and many other areas.
We focus on your needs and goals and design a customized and comprehensive multi-asset portfolio developed from an unbiased and independent analysis of investment opportunities worldwide. No matter your objectives, whether it be capital preservation or aggressive growth or something in between, we leave no asset class untouched in our search for the ideal fit for your portfolio.
Our three-step process for our clients is to (1) develop a financial plan, (2) determine a proper asset allocation and then (3) implement and monitor the plan.
We do not keep custody of your investments at any time. An independent custodian would be the primary custodian of your investments. At all times, you have full access and visibility to your portfolio on line via their website or phone and there is 100% complete transparency to all transactions as well as the current value and holdings of your portfolio.
We only invest in individual equities, bonds, mutual funds, exchange-traded funds and options. Whenever we directly invest in options (derivatives), it is with simple puts and calls that trade on a regulated exchange and have almost no exposure to counterparty risk. Furthermore, we always emphasize the importance of a well-diversified portfolio to help minimize risk (see asset allocation).
Developing Your Financial Plan
Developing your financial plan is our initial step to help lay out an investment program for you and set the stage for your financial future. Financial plans are unique for each individual and are a function of age, financial status, future plans and risk tolerance. Our process helps identify where you stand today, and what steps you need to take in order to get where you want to be in the future.
Before the investment planning process, we check to make sure that you have sufficient income to cover your everyday expenses and a cash reserve in case something unforeseen occurs. The next step is to determine where you are in the investment life cycle. The life cycle is made of different stages; accumulation phase, consolidation phase, spending phase and the gifting phase. As the investor travels through the cycle, goals change. We review your goals and objectives and figure out how you can get there from a financial standpoint.
We do a careful analysis of your risk tolerance. Aside from psychological factors, risk tolerance is also related to insurance, cash reserves, family situation, age, net worth and income expectations. We review constraints that might impact the financial plan such as liquidity needs, time horizon, taxes, legal factors, and other unique needs and preferences.
Based on everything above, we work with you to write a Policy Statement which represents the financial plan to guide the investment strategy. The Policy Statement determines the overall investment strategy. The Policy Statement does not identify individual securities to buy or sell, but it does help with what asset classes might be appropriate. From there, the process of Asset Allocation begins.
Asset allocation is the process of determining what part of a portfolio should be invested in each of the different asset classes. For example, a simple asset allocation might be 60% equities, 35% fixed income and 5% in money markets. Some asset classes might include equities, fixed income, commodities, currencies, real estate and private equity. Each asset class would be further divided into smaller classes. For example equities can be split up into growth and value; large cap, mid-cap, small cap and microcap; or domestic and international. Fixed income can be split into taxable and tax-exempt; long-term, intermediate and short-term, and within each of those sub-classes they can be further divided by the quality of the bonds, as well as domestic and international. Each of these different classes has somewhat different characteristics and a different risk/reward profile.
When making the asset allocation decision, it is important to understand where that asset is in terms of valuation and where the trend of the pricing could be headed. We look at fundamental, technical, historical and psychological factors as well as liquidity.
Some asset classes move together (in terms of value) almost in sync, some might move opposite to each other, others would be somewhere in between. This is called correlation. You do not want a portfolio that has a high degree of correlation between the different asset classes. An exception would be if you wanted a risk free portfolio, in which case you would buy 100% short-term treasuries.
All of the above is done after determining your short and long-term needs, your risk tolerance and your expectations.
Our aim is to put together a combination of asset classes that achieves the maximum expected return given your particular risk tolerance. This forms the basis of our strategic plan.
But our work does not end there. We will implement and monitor the performance of the investments and continue to communicate with you so that appropriate tactical adjustments can be made along the way.
Implementing and Monitoring the Policy
After writing the Investment Policy and determining the asset allocation, the next step is to implement it, to put it all into action. For any particular asset class, we have to determine what is the best vehicle. For example, we can invest in stocks directly, we can invest in a mutual fund, or we can invest in an exchange traded fund. We can do one, two or all three, depending upon the situation. At all times we will remain ready to adapt and make tactical or even strategic adjustments if the environment warrants a change.
At Envision, we believe in a combination of active and passive investing. We are not blind buy and hold investors, but on the other hand, we are not short term traders either. We generally lean towards an intermediate to longer term time frame when investing and tend to use lower cost and more tax efficient ETFs or index funds. However, in markets or in asset classes where a particular style of investing or where a particular fund might give us what we believe to be a competitive edge over a more passive strategy, we will take advantage of it. Of course, your individual situation would dictate much of this.
Before we invest in a fund or ETF, we get a good understanding of the investment’s strategies and objectives, its history, past performance, risk measures such as the standard deviation and the Sharpe ratio, valuation metrics, technical performance, management, tax efficiency, and its fees and expenses, among other things.
After making the actual investments, we next focus on monitoring the various investments. This is done daily as we keep a constant eye on the markets for you. We will also meet with you at least quarterly to review the progress of your investment program. However, we are always available more often on an interim basis if need be. At the quarterly meetings, we will:
- review the returns of the asset classes for the past quarter, year-to-date and one, three and five year periods,
- the performance of the entire account for the quarter to date, year to date and inception to date,
- compare the account to the proper benchmarks, and
- compare the asset allocation to the targets outlined in the Investment Plan.
After reviewing the above, we can determine if the overall performance is meeting our goals, do we need to rebalance, should we consider different investments, or is there a major reason why we should change our strategic plan. Maybe the investment climate has changed in some way or maybe your personal situatition has changed.
At all times our investments are transparent and we never invest in hedge funds or other vehicles for which public information is not readily available. We never take possession of your funds, they are always with an independent custodian such as TD Ameritrade and you always have complete access and visibility to the account via the internet or phone.