The investment process of SixPoint Financial Partners is a proprietary road map that helps us determine the best course of action for our clients.
The first part of our discussion is determining the individuals risk tolerance. There are two facets to the risk tolerance; the ability to withstand the variability of the returns in the market and the time horizon of the investment. From the beginning of the bull market in March of 2009 to January 31st, 2020 the S&P 500 has returned over 300%! We have seen very few quarterly statements showing negative returns during that time period. This has made investors become more "aggressive" than they normally would be. But what if we had a pull back in the market of 10%? Or even 20%? We have an open discussion with the individual(s) to see how much of the ups and downs of the market they can tolerate.
Once the risk tolerance and time horizon has been discussed we move onto the type of account. A retirement account such as an IRA or 401k have different tax ramifications than a non-qualified account. Selling a position inside of a pre-tax retirement account does not trigger a tax consequence unless the money is pulled out of the account. If we sell a position inside of a non-qualified account that is worth more than the initial investment, we may receive a 1099 statement in the mail. The investment styles may differ based on the type of account we use.
The next step in our investment process is choosing the appropriate fund managers. Some of the factors we include are:
- Downside Capture vs Upside Potential
- Manager Accessibility
- Fund Minimums
Our internal investment committee evaluates the fund managers performance with weekly check-ins and monthly detailed reviews against the appropriate risk level benchmark(s). During the month, the committee also participates in fund manager calls to get an update on their research and the direction of the fund. Along with the fund manager discussions, we work closely with the American Portfolios due diligence team. When the committee has collected and analyzed this information they provide the updates to the rest of the firm.
If you would like learn more about our investment process or to see how this could impact your strategy click here!