As the number of accounts that we manage here at Integrity Wealth Management rises, the process by which we manage these accounts becomes increasingly important. For example, in my first year as an independent, I had less than 10 accounts under management. Having only 10 accounts made it easy when it came time to readjust portfolios. I would proceed from one account to the next and make all necessary changes in as little as a few hours. However, as the number of accounts reached 20, then 30, then 40, it became increasingly clear that a well-defined process was needed to do this efficiently.

In this post, I’ll explain my new structure, where I draw the lines of distinction, what investments I am using, and how I facilitate the trades.

CATEGORY NAME: Auto Pilot
ACCOUNT SIZE:  < $25,000
TYPES OF INVESTMENT(S): Mutual Funds

In the Auto Pilot group, I place the entire account into one mutual fund which invests in stocks, bonds and cash. It may be a conservative, moderate or aggressive allocation fund. (At this point, all are in the conservative fund.)

CATEGORY NAME: Auto Pilot +
ACCOUNT SIZE:  $25,000 to $100,000
TYPES OF INVESTMENT(S): Mutual Funds and ETFs

With this group of accounts, I start with the allocation fund from the above mentioned category and add a few additional funds around the periphery. The additional fund categories include: Inflation Protected bonds, Global Allocation funds, Multi-Sector bonds, Currency, etc.

CATEGORY NAME: Models
ACCOUNT SIZE:   $100,000 to $500,000
TYPES OF INVESTMENT(S): Mutual Funds and ETFs

All accounts in this category are invested in one of four pre-set proprietary models. They are: Defensive, Low Volatility, Prudent Growth, and Accelerated Growth. I should note that the Defensive model is for taking shelter in the event of another 2008 type event.

CATEGORY NAME: Custom
ACCOUNT SIZE:  > $500,000
TYPES OF INVESTMENT(S): Mutual Funds, ETF’s, and Individual Bonds

Accounts in this category are invested according to a customized model on a per account basis. In order to use individual fixed income, there should be at least $150,000 allocated to it. Although this is somewhat subjective, I’d need to buy, at a minimum, six different individual issues of $25,000 each. I would still buy inflation protected, mortgage backed and other fixed income in a fund or ETF. But for the intermediate, short and ultra-short term categories, individual issues are fine. Additionally, I might buy a large-cap stock fund and layer it with an ETF in the event I ever want to reduce the portfolio’s stock exposure during the trading day.

Next week, I’ll elaborate on the trading system at TradePMR, my custodian, and how this exceptional tool allows me to carry out my mission with great efficiency.

Thanks for reading and have a great week!