Description of Services
Laidlaw Group constructs and manages portfolios for our clients on a discretionary basis. Legally, we act on our clients’ account with a limited power of attorney that permits us to buy and sell securities in accounts and to manage those funds to achieve our clients' investment goals.
How we work with Clients
Assessment of Client Goals: The first stage in the investment advisory process involves an assessment of our clients' investment objectives and constraints. Before we can construct and manage a portfolio of equities and fixed-income securities, it is vital for us to understand the following information:
- size of financial assets to be invested
- extent of other financial assets
- non-financial holdings
- income level and needs
- time horizon
- liquidity requirements
- risk tolerance
The assessment phase is not static; regular communication is necessary to insure that our clients' accounts are being managed to meet their changing financial needs. Certain aspects of this process are routine such as determining income needs and meeting those where they are achievable given market yields. However, determining an individual's ability to withstand market volatility and face potential losses is much more of an art than a science. Many individuals are significantly more risk averse than they realize due to the fact that capital losses are felt much more strongly than gains. No securities will be purchased without this vital evaluation.
Asset Allocation: The assessment of clients' goals allows us to develop a target asset allocation which generally consists of equities (including international), fixed-income securities and cash. Accounts with longer investment horizons and higher risk tolerances will be more heavily weighted towards equities while other accounts will include more cash and bonds.
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Equity is allocated among one of our three Styles/Products: Large Cap Equity- Core, Multi-Cap Equity- Dividend or Small Cap Equity- Core
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Fixed income is allocated using fixed-income Exchange Traded Funds (ETFs) to reduce volatility and provide income. Duration and credit quality are dependent on analysis of the prevailing yield curve and credit spreads.
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International allocation is done through country or region specific indexed ETFs to divesify domestic equities. We use active allocation to markets which are growing faster or are less expensive than US markets.
Top down investment analysis also influences our asset allocation decision. For example, during periods when the equity markets are overvalued, we will lower our clients' exposure to stocks and increase levels of cash. These decisions result from a judgment regarding flows of capital in the global economy and an appreciation of historical valuation levels.
The importance of an appropriate asset allocation cannot be over-emphasized since certain academic studies suggest that asset allocation influences total return more than any other factor. Of equal importance, a proper asset allocation reduces the volatility of a portfolio and provides peace of mind during periods of market turmoil.
Communication and Reporting: Effective communication with our clients is one of the most important aspects of our business. Communication is also vital to provide continuing management of an account to make sure that a client’s needs are being addressed. Therefore, we are always a phone call or e-mail away from our clients.
Monitoring Goals vs. Investments: Our managers constantly monitor client portfolios to ensure that our clients' needs are being met.
