Once a portfolio is funded, Jerry explains that patience is a virtue. “Our theory is this – a portfolio is like a bar of soap; the more you handle it, the smaller it gets.”  Best known for his willingness and ability to educate, Jerry works patiently with clients, developing what he calls a ‘successful investor mentality.’  “From my many years of observation, I find an investor’s worst enemy is often him or herself.  In order to be a successful investor, one must be able to master his or her emotions.  Developing a ‘successful investor mentality’ is a matter of being prepared – both financially and psychologically – for the inevitable volatility of investing.  Being intellectually prepared is the easy part.  Having the emotional tenacity to react appropriately is the key.”  Jerry finds his single greatest attribute as an experienced financial advisor is being a psychological pillar for clients – calmly and rationally explaining why markets do what they do and guiding them on how to respond.

Strategic asset allocation is a key element to investment success.  Proper asset allocation plays an important role to pursuing long-term investment success.  This is especially true for investors with moderate-to-lower risk tolerance – the amount of volatility an investor can withstand in their portfolio.

Asset allocation is the implementation of an investment strategy that attempts to balance risk versus reward by assigning a percentage of each asset class according to an investor’s risk tolerance, goals, and investment time frame.

Jerry seeks to simplify the definition of asset allocation, saying, “It is the conscious decision not to make a killing for the blessing of not getting killed.”

Asset allocation is not a static process.  For this strategy to be at peak performance, annual rebalancing – bringing the investments back to their initial percentage asset allocation – of the portfolio is very important.  This means trimming back last year’s winners and investing those profits into last year’s laggards, which supports the objective to sell high and buy low. 

Changes in asset allocation also come about due to changes in the client’s current situation, future plans, feelings, and family dynamics.

Ultimately, the relationship between the client and the wealth management professional boils down to good communication.  Jerry explains, “At the onset of the relationship, certain communication standards must be established ... how often do we communicate, how often will we meet in person, and what other forms of communication the client prefers – mail, e-mail, text, etc.  It is also very important that the client keeps us apprised of their world.  Our ability to make a difference in our clients’ well-being is directly related to how much we know about them.

Asset allocation and rebalancing do not ensure a profit or protect against loss.  Rebalancing may have tax consequences, which you should discuss with your tax advisor.