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Investment planning process

If you’re building your dream home, you’ll likely start with an architect to help you bring your wishes to life. The architect recommends the builder, and the builder hires and manages your team of professionals — interior designers, electricians, plumbers, carpenters, and landscapers — who collectively have the skills and knowledge needed to bring your dreams to reality. 

Building your dream retirement also takes planning, time and a team of skilled professionals. At the Susan O’Brien Group we function as both the architect and the builder of your dream retirement. In this blog post we share how we work to create your dream life by explaining our investment planning process through the lens of building your dream home. 

Building your dream retirement

Phase One: Constructing a Wealth Plan

When you work with The Susan O’Brien Group, our first phase of construction is getting to know you. In our planning discussions, we work together to define your dreams, review where you are today and determine what needs to be done to build your dream life. We then use this insight to design your personalized Wealth Plan.

The Wealth Plan is your key to investing success. It includes your recommended Asset Mix, designed specifically to meet your goals, and the rate of return needed to meet them. Your portfolio has different portfolio managers which we select using the rigorous selection process outlined in phase two.

Phase Two: Creating the team to build out your Wealth Plan

A written Wealth Plan is the blueprint for living your ideal life or ideal retirement, but without a builder it’s only a plan. To ensure the plan comes to life and achieves your goals, we find the right managers to act on the strategy we have designed. In wealth management terms, The Susan O’Brien Group is what is called the oversight investment manager. This means that we both select and oversee the investment managers who invest your portfolio in accordance with the asset mix we have designed. 

The 4 Ps

With our due diligence and Richardson Wealth’s extensive resources, we employ a rigorous investment manager selection and evaluation process, that starts with the 4 Ps: People, Philosophy, Process and Performance. 

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1. People

The “People” part of the process refers to three main groups: the portfolio managers leading the strategy, the research teams behind the managers and the investment firm they work for. 

We ask portfolio managers questions about their qualifications, work experience and personal investing philosophy, as well as the length of time they have been investing in the strategy and the number of strategies they work on. 

We also ask questions about the style of their investing and investment team including whether their money is invested alongside their recommendations, and whether they work collaboratively with co-portfolio managers, using a team of research analysts, or work alone and complete their own research. 

An investment firm also plays a key role in the skill development of their investment management and research teams. We dig deep to discover the firm’s structure and history, whether they encourage freedom of ideas and whether they have investing biases or a rigid top-down view. 

We look for independent firms with long histories who create an environment where portfolio managers and research analysts can do their best work, free of conflicts of interest.

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3. Process

We also take a deep dive into the investment process of the team and expect to see a well-defined process that is consistently followed. 

We ask questions like:  

  • What processes and technologies are used to build the foundation of the portfolio? For example: 

    • Is artificial intelligence part of the process?

    • How is individual investment research, such as stock analysis conducted?

  • Are investment decisions made as part of a team, or alone? A team that makes its decisions together is fundamentally different than a team of one, such as a “star manager” approach to investing. 

  • Are decisions made unanimously? 

    • In team structures, we want to know if decisions are made unanimously, by majority, or by deferral to area of expertise. Additionally, does their decision-making criteria differ depending on the type of trade being considered? For example, unanimous for buying, but only one vote needed to sell?

We also want to know if they periodically review their own processes, and if any element has changed over time, how and what changed? One common example is ESG — Environmental, Social, and Governance reviews — which in recent years have become a bigger factor for both investors and regulators of investment firms. 

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2. Philosophy 

Every portfolio manager has a unique investment philosophy and style — and biases. Because these biases will ultimately influence the investment process, we need to understand the manager’s philosophy and process. 

The two most common investing styles are growth and value. To differentiate the two, we ask questions like:

  • Are they a value manager focused on the balance sheet of a company, or are they a growth manager focused on the income statement? 

  • Are they looking for stocks that are undervalued relative to the market? Or do they look for growth stocks that may be expensive, but still have room to grow? 

Specifically for mutual funds or alternative funds, we also look at the prospectus for more information. Reviewing the prospectus is like completing a background check: mutual funds are not static and can be changed over time. For example, some mutual funds are altered through fund mergers, and others can experience a change in scope or investment parameters. Reviewing the fund’s prospectus over time is a good way to identify these transitions or modifications.

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4. Performance

Performance is the last criteria we evaluate and for good reason. If the strategy has a strong team, guiding philosophy and robust processes, then the performance should follow. Many advisories and do-it-yourself investors look only at an investment manager’s performance and often review too short of a time frame, ignoring all the other important criteria. Evaluating the full picture and focusing on long-term performance — ideally five (5) years+ but no less than three (3) years — is one of the many ways we set ourselves apart in our industry and provide you with an optimal portfolio.

Why our investment planning process works

We produce diversified, high-quality portfolios that deliver more consistent returns, are resilient to the normal ebbs and flows of markets and are capable of withstanding exogenous market shocks.

At the Susan O’Brien Group, we’ve successfully employed this investment process for over 20 years. As with any continuous, robust and thoughtful process, it takes considerable time, but this attention to detail is what each of our clients deserves. You have entrusted us with your life savings and the wealth you intend to protect, grow, and potentially pass onto future generations. Anything less than this level of care and due diligence would not do. 

Let’s get started

When you trust our team to help you accomplish your financial and lifestyle goals, the hardest part for you is deciding how big you’d like to dream. Leave the planning and implementation to us.

Let’s start designing your dream life. Contact us today by phoning our office at 403.355.6053.