Investment Advisory
Last year, we emphasized the importance of an investment plan. In no year was that ever more important than in 2009, as investors' tolerance for risk has truly been tested. We continue to remind our clients that the best way to weather unforeseen market turmoil is to rely on their personalized investment plan. Well-prepared investment plans are tailor-made to suit each investors' risk tolerance, asset allocation and both short- and long-term investment goals. When faced with shifting market events, our clients can feel comfortable knowing they have a comprehensive plan in place.
As the markets and the economy move closer to "normal," we also believe it is an opportune time for investors to evaluate risk levels to see if changes to their Investment Policy Statements are necessary. Two points should be considered when reevaluating portfolio risk. First, the market fluctuations we experienced this past year will likely happen again; and second, "normal" will look very different going forward. Investors should also focus on how much they can lose in an investment rather than how much they can gain, as well as determine a comfortable level of volatility in their investment strategy and live with it.
The second half of 2009 can be seen as a period for recovery for most investors. Despite the ebbs and flows to the economy and market, we believe certain investment principles remain true. Most notably, investors should focus on their family's financial needs now and during retirement, establish goals that seek to achieve long-term compounding of returns and try to avoid the daily "noise" of actionable trading ideas.
Retirement Plan Advisory
Retirement plan sponsors continue to deal with an increasingly challenging and complicated retirement plan environment. In today's volatile markets, retirement plans attract an increasing amount of attention from Congress, the Department of Labor, the SEC and plaintiff attorneys. Specific areas of concern continue to be employee savings and the dramatic impact markets have had on their account balances, as well as the performance of "target date funds", which ironically, were backed by the DOL in the Pension Protection Act as a "qualified default investment alternative" or QDIA. Also, proposals from the Senate, House and Department of Labor regarding the disclosure of fees and revenue sharing and advice in retirement plans were put on hold by the Obama Administration in order for new appointees to have input into the regulations.
The Pension Protection Act was the most significant reform to retirement plan law since ERISA was enacted in 1973, and it now seems inevitable that retirement plan law will see additional reform in the months and years to come. Because of current law and possible reform, retirement plan fiduciaries face unprecedented liability and require more objective assistance than ever before. Specifically, fiduciaries need help selecting the appropriate investments, understanding and comparing fees, evaluating plan vendors and creating innovative ways to help their employees reach financial security. Not only do we provide these services to our clients, we also accept, in writing, a fiduciary status on clients' behalf as further evidence of assurance. Being an independent, registered investment advisor, we provide comprehensive consulting services that establish and/or maintain an ongoing documented process of prudent oversight and due diligence.
