At Fichter Wealth Management, we believe investments are a means to an end. Whether you are an individual investor, small-business owner, or overseer of a company retirement plan, your portfolio should be structured to provide the greatest probability of attaining your financial goals. While the strategies we recommend can be as aggressive or conservative as necessary, our investment philosophy incorporates three key aspects.
One of the primary building blocks in any investment approach is the asset allocation chosen. Asset allocation is the arrangement of how much of your portfolio will be invested in the major asset classes, such as stocks, bonds and cash. While asset allocation will not guarantee a profit or prevent losses in a declining market, numerous academic and industry studies have shown that how a portfolio’s assets are allocated is the primary determinant in decreasing volatility in performance, more so than security selection or market timing. Accordingly, we don't try to "outguess” the markets through market timing, nor do we seek to pick the next "hot" stock. Rather, we focus on making the best possible decisions to generate acceptable returns at a level of risk suitable to you.
While asset allocation is the central factor in building your investment plan, we strive to provide additional value by identifying, hiring, and monitoring a select group of money managers who are specialists in their respective disciplines. Through our associations with institutional money managers, you gain access to prominent managers with tools and techniques that were previously unavailable to all but the largest institutional investors. The best predictors of a manager's performance include their decision-making approach, the consistency of the investment process, the quality and continuity of the investment team, and the manager's ability to mitigate trading costs. Careful evaluation and due diligence are crucial to sifting the wheat from the chaff. As such, we aim to differentiate between those managers whose performance may have simply been a matter of luck and those who possess the critical skills likely to contribute to their continued investment success.
Whereas the first two processes tend to be more structured and scientific, the portfolio construction process is more nuanced, balancing both research and your practical needs as an investor. In essence, portfolio construction is the marrying of the asset allocation strategy and universe of managers into a refined, customized solution uniquely tailored to match your individual needs and situation. In the process, your strategy can be fine-tuned to include additional higher risk or less liquid asset classes (e.g., Emerging Markets, Real Estate, Commodities, or High Yield), and the mix of investments comprising the portfolio can be blended based on your desired risk/return level. In addition, strategic and tactical solutions may be combined for investors seeking both the stability of a strategic option, and the potential value added through a tactical overlay.