Portfolio Construction

Step One: The Discovery Meeting(s)

  • These meetings are where all relevant information is discussed. This includes current state of affairs, goals, objectives and risk tolerance.

  • We outline the process, investment philosophy and the client service model for the prospective client.

  • This is the stage where a determination is made between the prospective client and Perram Wealth Management about whether or not the “fit” is beneficial to both parties and an agreement to do business is made.

  • This process usually takes 2 to 3 meetings. The first meeting generally lasts 60 to 90 minutes. Subsequent meetings are typically 60 minutes.

Step Two: Establishing your Risk Profile (CRP)

  • Completion of the Client Risk Profile. This is a scientific approach to determining the most optimal risk profile for the client.

  • The questionnaire takes approximately 30 minutes to complete. The Client Risk Profile report is used in conjunction with our discussions with you regarding your objectives and financial goals to determine an appropriate asset allocation.  

Step Three: The Investment Policy Statement (IPS)

  • This document establishes the “game plan”, if you will. It also lays out the Investment Model which is driven by the client’s goals and objectives as well as their risk information gleaned from the discovery meetings and their risk profile.

  • It formalizes the investment strategy and the implementation process. This includes selecting the most optimal investment model and asset allocation.

  • There is a determination of need around our Wealth Management offering. This includes a robust financial plan, a clear and concise will and estate review as well as a risk management review. These services are introduced and completed over a period of time, usually over 12 -24 months.

  • The IPS also details the Client Service Plan. Through discussions with the client a Portfolio Review schedule is agreed upon. Also the Wealth Management roadmap is outlined and scheduled.

Step Four: Portfolio Construction

  • Once the investment model is decided upon we then look to construct the portfolio.

  • Consideration is made for legacy positions, fees, tax consequences as well as market conditions. It is not unusual for the portfolio to take many months to be fully invested in the investment model.

Step Five: The Rebalance Strategy

  • We use a Strategic Asset Allocation Rebalancing approach when managing each portfolio. Specifically, in conjunction with the client we set a target asset class weight based on the Investment Model selected in the IPS.

  • We then establish minimum and maximum thresholds for each asset class. For example the fixed income asset class may have a target weight of 40% with a minimum threshold of 35% and a maximum threshold of 45%. Once the weighting has breached the thresholds the asset class is rebalanced.

  • As an additional layer we always review the rebalancing model during every portfolio review.

Step Six: Periodic Portfolio Review

  • The final step is an ongoing scheduled portfolio review with each client. Through discussions with the client and as per the IPS we schedule regular portfolio review meetings. These are generally quarterly, semi-annually or annually. The schedule will likely occur the same time each year.

  • The Bottom Line Report as well as The Rebalance Report is reviewed with the client based on the review schedule. We review with the client the performance of the portfolio as well as discuss and incorporate any changes that are necessary.

  • The IPS may include a Wealth Management roadmap which includes financial planning, will and estate planning and a risk management review. A discussion is made as to the progress of these areas.

  • We also review any material and relevant changes in the client’s situation. Common changes may be residency change, divorce, illness, impending retirement, etc. These changes may require an update to the risk profile and the IPS.