Longevity increased by 40 years in the last century and may do so again in the first quarter of this century. The reasons are laid out convincingly in IA’s December 2005 cover story. Realizing this helped convince me that I needed to review my firm’s longevity assumptions, identify the chinks, and fill them.
Right off, I saw a serious gap: our investment strategy. The quality of life–short, long, or longer–depends in large part on a reliable flow of sufficient income. Beating the major indexes isn’t good enough. My clients need absolute returns, up every year no matter the quality of the securities markets. My business also needs them. With them in place, money becomes a reliable tool that raises the chances of our clients, and us, becoming healthier, wealthier, wiser, and older.
I asked my investment team to join my quest for absolute returns. Our first decision was to search more diligently for no-load private equity. We found four promising resources that were new to us, giving me reason to guess that we will, in time, expand our menu to 16. Our goal was to present our qualified investors with reasonable hope of double-digit returns, year over year, with or without the help or hindrance of the securities markets. If we’re not there now, we soon may be.
Our second decision was to identify securities strategies that produced positive total returns in each of the six years through 2005. We view those years as the most valuable investment laboratory ever, in that they present an up-to-date experience with all three kinds of markets: up, down, and sideways.
Our watchlist includes stocks and funds flowing from more than 20 absolute-return strategies: bull, bear, and trading-range. They include stocks, ETFs, closed-end funds, and mutual funds that trade like stocks. We found one no-load stock fund and 500 stocks that were up each of the six years. And we soon saw that short-term consistent performance can be even more valuable than consistent profitability over a longer term. We continue to believe in our underlying approach: value on the move.
Our work on investment strategy led us to reexamine our approach to financial planning. If we found and proved a double-digit absolute return strategy, would we need to offer financial planning? Would we then need to emphasize information or advice? The answer, we decided, depends on our client base. Clients who don’t know what they don’t know need both. Those who understand the value of planning may need little advice but lots of information.
Our clients are well-educated and well-informed, but overworked and short on time. When we give them straight-to-the-point information, they need our advice mostly to confirm their decisions. So we’ve loaded our Web site with information, both financial and beyond. After all, our mission statement can be summed up in these words: We’re all about the quality of life.
Estate planning is the subject that most often puzzles them. I refer them to information presented free at Nolo.com and NAFEP.com. I clear their minds by pointing out how simple it is to avoid estate taxes: Leave everything to each other, and the survivor leaves everything to charity.
Balliett Financial Services, Inc.
Winter Park, Florida