At The Humphreys Group, we’re not only experienced planners — we’re also disciplined investors. Our approach is based on the science of capital markets. We use low-cost, highly diversified, tax-efficient vehicles and don’t play the game of trying to call market swings.
After 30 years in the business, we’ve weathered good markets and bad, and have generated results that demonstrate an unwavering commitment to our clients’ financial well-being. We take our fiduciary responsibility as stewards of your investments very seriously. For most of our clients, the assets we manage represent the bulk of their wealth. We aim to maximize returns while also managing risk and volatility. We maintain the discipline and perspective needed to resist the temptation to pursue speculative investments during sizzling markets or to let doom-and-gloom scenarios prevent participation during market rebounds. As a result, our client portfolios are resilient and designed to weather a range of unpredictable market storms intact.
When it comes to your investment portfolio, we start at the beginning: asset allocation. Getting the asset allocation right (most broadly, the mix of cash, bonds and stocks) is key to constructing a portfolio that holds up against two realities investors must face: volatility and uncertainty.
We believe that your asset allocation should reflect your financial profile — your needs, concerns and circumstances. Your asset allocation is based on your Portfolio Guidelines, a tool we create together and change over time as your life changes.
Your Portfolio Guidelines will be the foundation for every decision we make for your portfolio and will contain our recommended asset allocation targets for you. Key components of your Portfolio Guidelines include:
How do we determine your risk tolerance and risk capacity to inform your portfolio design? While risk capacity is the degree of uncertainty you can afford to take (based on your assets, income and other financial factors), risk tolerance is the level of uncertainty you can stomach on a gut level, the “sleep at night” factor. We know that risk tolerance can be difficult to quantify. To help gain a better understanding, you’ll have an opportunity to complete an online risk exercise. This tool is a robust and systematic quantitative measure of risk tolerance, something that by its nature is qualitative.
Often our clients come to us with an existing portfolio of investments that may not be in sync with our allocation targets. We map out a plan to get from Current to Target, and over time make the shift, keeping in mind a host of considerations including capital gains taxes. Although we generally manage the entire investment portfolio for our clients, you may hold assets outside of our management, such as a 401(k) or another employer-based retirement plan. If this is the case, we will also put together your Global Asset Allocation, an analysis of the mix and diversification of your combined investment portfolio. We update and review this at least annually to ensure that your overall investment exposure is aligned with your optimal asset allocation.
Over time we will actively monitor your account and adjust your portfolio as needed to achieve your goals. Crucially, your target asset allocation will change in response to your own evolving needs, as reflected in your Portfolio Guidelines, rather than to perceived shifts in the investment climate.
While the underlying components of each client’s portfolio guidelines may differ, our process is guided by our top 10 investment principles.
Should your current portfolio include individual stocks, be assured that we will not sell them outright. First, we will assess them to determine whether they are compatible with your Portfolio Guidelines. We’ll also consider other factors, such as performance and potential capital gains taxes before recommending which stocks should be kept in your portfolio and which should be sold. We will never sell your stocks without your agreement, regardless of our long-term goal to shift out of individual stocks and into mutual funds.
When it comes to specific investment decisions, we invest with a range of mutual fund providers and rely on the academic research of Dimensional Fund Advisors (DFA), led by their brain trust of Nobel Laureate Eugene Fama and Kenneth French.
DFA is a leading global investment firm that has been translating academic research into practical investment solutions for over 30 years. The firm’s approach is guided by a strong belief that ultimately, markets work. They believe that markets are efficient, and further, that security prices reflect all publicly available information as competition among market participants drive prices toward fair value.
Using efficient market theory as a starting point, DFA works closely with leading financial academics to identify new ideas and conduct research to benefit investors. Over time, this work has led to the identification of systematic differences in expected returns – coined by DFA as “dimensions.” Such dimensions include the equity premium, the small cap premium, the value premium and the profitability premium. DFA has created low-cost mutual fund portfolios that are structured to take advantage of these dimensions.
As life changes and your financial situation evolves, we proactively determine whether course corrections are warranted to keep you on track. We monitor the performance of your funds and will rebalance your portfolio on a quarterly basis — keeping all the elements of your Portfolio Guidelines in mind. With our sound financial framework, you can feel confident and ready for today and the future.
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