We accomplish this through a four-stage process (discussed in detail below):
- Discovery: we get to know you and help clarify what you want your money to do for you.
- Planning: We review your financial resources and develop the strategies and tactics needed to achieve your goals.
- Implementation: We hand craft your portfolio based on our proven ownership investing approach. We implement agreed-upon strategies and tactics, coordinating with other experts as required.
- Monitoring and reporting: Throughout the process we report on your progress and act as your “hand on the tiller” to ensure you stay on track to achieve your goals
Discovery: Defining Your Vision and Goals
We know that wealth is about more than just money. Our proprietary discovery exercise is designed to get a complete picture of your life and what your ultimate goals are so that an appropriate wealth management strategy may be created as a first step on your financial journey.
Planning: Your Wealth Management Strategy
Once we know what your vision and goals are, we consider how those financial goals can best be realized. For those still in the accumulation phase this may take the form of a plan for financial independence setting out savings and investment goals within a specified time horizon. For someone who has achieved a degree of financial independence it may involve structuring a portfolio to best meet cash flow, family security and succession objectives.
In some cases, outside expert professional advice will be required and we are prepared to work with other advisors to achieve the desired result or to make referrals to other professionals with whom we have experience.
Once the strategy is agreed upon and the pathway to success is clear, we begin the process of building an appropriate investment portfolio.
Implementation: Handcrafting Your Portfolio
Asset Allocation – The asset allocation applied to a portfolio is driven by spending needs, not by the desire to mitigate volatility. Cash and bonds are losing propositions in the long run, after tax, fees and inflation are factored in. However, they have the advantage of short-term stability and predictability. Therefore, they will make up that portion of a portfolio that is required to meet near-term spending requirements. Cash and short-term bonds are also used as a store of value when sufficiently attractive equity investments are unavailable.
Security Selection – In collaboration with our colleagues at Silver Heights Capital Management, we identify and monitor businesses that meet the investment criteria for inclusion in a Genova Private portfolio. This allows us to concentrate our efforts on strategically improving our clients’ financial affairs rather than the tactical application of individual security selection. Genova Private portfolios include companies listed on North American public markets. We do not invest in private equity or hedge funds.
Investment Criteria – In building the growth component of a portfolio, our overall objective is to acquire good businesses for less than they are worth. We believe that an assessment of the quality and value of a business is vital and that the price at which it can be acquired is equally if not more important. Paying close attention to price allows us to improve portfolio returns by reducing risk.
The perfect investment is a high-quality business (being one with a sustainable competitive advantage, high returns on capital, competent management and financial strength) that is available at a large margin of safety.
Such opportunities by their nature are extremely rare. In their absence, it may be necessary to provide for a wider margin of safety on businesses that may be of good quality but less than perfect. This requires the investment manager to be unemotional and patient as well as having a willingness to take a contrary view. This approach results in a portfolio that is relatively more concentrated, has a lower turnover and is more tax efficient than the average mutual fund or institutional portfolio.
Monitoring and reporting: Tracking your Progress
With monthly and quarterly reporting, together with periodic meetings, we keep our clients up-to-date on their progress toward their goals.
Some clients have also retained us to prepare special reports aggregating information on assets managed by other managers as well. In this way, they can see their complete financial situation at a glance. This has the further advantage of having current information on income tax liabilities as well. This allows clients and their tax advisors to take action in a timely manner to realize opportunities for tax savings.