DOLLARS AND SEN$E

Product vs. Process

BY CHRIS HANLY
Investment Consultant, Gary Goldberg Financial Services

With the first half of 2013 coming to a close, I’ve been meeting with clients regularly to review their portfolios and discuss our results from the preceding 6-12 months. Needless to say, there’s been a fair amount of smiling and sincere thanks. While we will certainly pat ourselves on the back for these accomplishments, it doesn’t hurt that the markets are up 15+% YTD. I often express to each of my clients that in the end, the markets make you money. My job is to make sure you’re positioned accordingly during bullish cycles to participate in these gains. Alternatively during bearish cycles, my job and strategy turns defensive and our new goal is preservation of capital. We all know that trees don’t grow to the sky. This is where it’s important to understand the difference between a product and a process.

Investors are often sold products which carry commissions, paid at the point of sale. Where the issue lies (and I know this from experience) is the apprehension to make necessary changes, i.e. buying and selling during volatile time periods. Investors who paid a 5 percent load (commission) to purchase an “A” Share mutual fund will naturally be reluctant to sell 3 months later, only to buy another “A” Share fund and pay another 5% load. Believe it or not, subconsciously the investor would rather “wait for it to come back” rather than sell and reposition into something more attractive.

If you haven’t guessed already, this method of investing in our opinion has no process and unfortunately, the investor can be left burdened during volatile times. On the other hand, investors who hire me and Gary Goldberg Financial Services as their money manager understand that they’re part of a process, and are never sold a product. By utilizing our trademarked Montebello Process, we break down clients assets into three distinct baskets, ensuring ample monies are set aside and prudently invested to cover the short, intermediate and long-term. Short-term monies can be viewed as your emergency basket – which in our opinion should take on little to no market risk (cash equivalents are often appropriate). For medium to long-term monies, the Gary Goldberg Financial Services Strategic Investment Committee provides 15 different model portfolios to choose from – each addressing a specific function on a risk-adjusted basis (capital appreciation, dividend income, insured lifetime income, etc). Moreover, clients pay an annual management fee that absorbs all trading costs. Hence, if and when we see a correction during 2013, we have an opportunity to get defensive in our strategy and make changes to these models on our client’s behalf, without costing them an arm and leg to do so.

Christopher Hanly is an investment consultant with Gary Goldberg Financial Services in Suffern and can be reached at (845) 368-2900 ext. 247 or [email protected].

  chris hanly, gary goldberg financial services