End of the first quarter, how about a blog post?
I'm so glad winter is behind us, but is it really already April?!
It has been too long since many of you have availed yourselves of our wealth management capabilities. Check out our new tools (below) for collaborative financial planning.
First, a quick summary of our Risk Adjusted Portfolios (RAPs). At quarter end, all of our Risk Adjusted Portfolio Models were close but slightly behind their benchmarks. The constituent indices in our benchmarks ranged in return from 0.95% to 2.68% for the quarter. As I write this letter on April 6th, all (except the Conservative NTF RAP which is 0.09% behind year-to-date) are solidly between their US Only and Global benchmarks, and the indices we base them on range from 0.92% to 3.36% as of last Friday. I’m very pleased and believe we will continue to see improved and/or superior relative results for our portfolios so long as market volatility levels continue to increase to normal levels. Now let’s talk about the stuff that you can control!
While there are lots of automated online “robo” planning and investment tools today, they are only as good as the information they get (and that isn’t very complete). The huge thing they cannot do is actually know you, and through conversation and thinking together, figure out when the typical thing to do is perfectly wrong for you. They also don’t do a good job of understanding how some financial tools can play multiple roles. 529 College Savings Plans are an example. I don’t like them for college savings! So they are a purpose built tool for college savings, and because of that they have some significant disadvantages that can be avoided with careful use of other techniques or tools which may not be specifically for college savings and may well be used to meet several planning needs. I’ll use 529s where appropriate but they are not the best way to save for many, though they may be for some. The web really won’t help you sort that out. We will, for this and many other subjects.
Here is how we do it today. Better, faster, more available to you and easier for you than ever before.
I’ll be providing several web addresses below other than our usual company address www.rfgweb.com. They are for convenience when you are typing addresses or clicking on them in this letter in order to go directly to specific client resources, skipping intermediate links and clicks. The same resources are all also available at www.rfgweb.com under various links.
Login to your RFG Wealth Management Portal from your computer phone or tablet at www.rwealth.net or at www.rfgweb.com->Client Access, ->Wealth Management. For most of you your username is your email address.
To see a 2 minute video demonstration with sound for what it can do, watch Imagine the Future at www.rwealth.info.
This site is the same one we have used for 7 or more years. It has been massively upgraded and now does far more, far more easily. In fact, many of you will find you don’t need our investment reporting page (MyAccounts) at all! Your quarterly statements from your MyAccounts page are automatically copied into and stored in your Wealth Management Portal Vault, investment pages in your Wealth Management Portal pull through your actual performance calculations from MyAccounts, and many of the popular reports run from MyAccounts are run more easily from your new Wealth Management Portal. So come to www.rwealth.net, connect the financial accounts we don’t have in there for you already, (401(k), bank, credit card, other investment, insurance, mortgage), see everything in one place, (including all your spending, automatically!) and know today and every day how ready you are for retirement or whatever is next! Trevore, Michael, or Susan can help you to get your login -straightened out if you need, and Trevore or Michael can assist you with connecting accounts and a walk through of the system. Call them at 847-670-8000.
Your Investment Reporting Portal is also much improved with a cleaner, easier interface and available for your use at www.myrfg.net, or www.rfgweb.com->Client Access->MyAccounts. It is a much more sophisticated investment reporting system than the parts of it available at www.rwealth.net. If you have any questions while you are there you can click on a link there where you can schedule an appointment convenient for you for a 15-30 minute call from me! This portal is also available on your smartphone and tablet by searching the Android or Apple iOS application stores for myRFG. Load it and login with your usual username and password and keep all of your investment information at your fingertips.
Find your MyAccounts app on your phone or tablet by searching the Android or Apple iOS app stores for “myRFG”. There are also links to the apps on our website.
We have changed how we build portfolios over the last year and now use 3 to 5 different applications (depending upon the portfolio model and securities) to view the same securities from different vantage points. In addition, we have simplified the structure, vastly increased the breadth of market exposure, and reduced the underlying net expense ratio of every Risk Adjusted Portfolio model (RAP). Net expense ratios of our RAPs have been reduced approximately 50% over the past year; a savings of more than 0.50% per year for most. We seek to provide targeted exposures to equity and debt asset classes being cognizant of tax and expense impacts, and with the objective of reducing volatility. Our traditional strategy of using broad diversification, tactical rebalancing, and seeking to buy asset classes that fall to very low fundamental valuations (when available) remain the cornerstones of our process. That means the return characteristics of our RAPs are typically such that when markets drop or remain fairly flat we will often beat our benchmarks and when markets are up very strongly we will often trail them. Recent research from Morningstar has measured the difference between the returns investors enjoy from different securities and portfolios, compared to the return of the portfolio or security itself. It is widely known that investor returns and the returns of the securities they invest in are not the same due to cash flows and investor behavior. This research shows that investors in lower volatility portfolios enjoy a positive return difference from their underlying securities on average. Investors in higher volatility portfolios conversely suffer a return deficit from the securities in their portfolios on average. Their conclusion is that, in part, lower volatility portfolios are producing greater investor return per unit of risk than higher volatility portfolios. Hence, we continue to try to reduce unnecessary volatility.
A fun thing for us, and a valuable thing for you is that we can now show you exactly what the average and “stress test” volatility levels are for your specific portfolio(s)! We do this with you online. On our website you will find buttons asking “What is my Risk Preference”. Click on one or go directly to www.myRFG.me and follow the graphical questionnaire through from 3 to 7 questions typically; you will be telling us your specific Risk Preference for your investments. We will then contact you to review with you live on your computer or tablet, just how your actual portfolio risk compares to your preferred risk, alternatives that may better suit you and how the changes might affect your retirement income. It should take no more than 15 or 20 minutes total to KNOW that your investments fit your preferences and to understand what that means for your future. It is truly an outstanding investment!
Well that is a lot for one quarter! I hope you will come to our websites and engage us in any of the ways that suit you best. If there was just too much here and you don’t know where to start, I have just one place for you to go! Click on this link or type in your browser, www.mywealthadviser.com/and you will be taken to my calendar where you can select the most convenient 15-30 minute time for you. I will contact you at that time, at the number you specify and we can talk about what your needs are and what the next step should be. I promise you will be very pleased at how much we can do in a very short time!
Have a wonderful spring!