Our Investment Process

There is a world of invest­ment options com­pet­ing for your atten­tion. With cap­i­tal mov­ing across bor­ders at the speed of light, inde­ci­sion can be costly. Where will your money grow the fastest and within your com­fort level for invest­ment risk? What is the best way to orga­nize your wealth? If you do not have the time, knowl­edge, or incli­na­tion to fol­low the invest­ment mar­kets and man­age your wealth as closely as you should, we can be of help to you.

The deci­sion to select an invest­ment advi­sor is impor­tant and rests on both pro­fes­sional and per­sonal fac­tors. Stan­Corp Invest­ment Advis­ers offers these advantages:

• Expe­ri­ence and pro­fes­sional accreditation
• Repeat­able invest­ment methodology
• Ana­lyt­i­cal and sys­tems resources
• Cus­tomized, per­sonal service
• Fee-only advice with an unbi­ased perspective
• Trans­par­ent and rea­son­able fees

Our busi­ness is orga­nized to meet the needs of indi­vid­u­als and uni­ver­sity employ­ees. Our expe­ri­enced finan­cial advi­sors will talk with you about your objec­tives, develop a finan­cial and/or invest­ment plan, and, if nec­es­sary, coor­di­nate rel­e­vant issues with your accoun­tant or attor­ney. Our invest­ment man­agers will build your port­fo­lio using proven finan­cial tech­niques, report to you quar­terly, and we will be avail­able when­ever you would like to talk about your investments.

A Repeat­able Invest­ment Method­ol­ogy and Process

Our pro­pri­etary invest­ment man­age­ment process is time tested and rig­or­ous. We select invest­ments based on their expected return and covari­ant prop­er­ties when com­bined with other invest­ments. Our hold­ings are weighted to pro­duce a port­fo­lio where the risk-return trade off is math­e­mat­i­cally opti­mized to meet your needs. Our decision-making process is orga­nized around a team approach in which we take advan­tage of the diverse expe­ri­ence and back­grounds of our entire staff and all of the resources avail­able to us.

We mea­sure our per­for­mance so that we can assess the effec­tive­ness of our meth­ods and cal­cu­late attri­bu­tion to each com­po­nent of our decision-making process. By know­ing these impor­tant facts, we are able to con­tin­u­ously improve. Here is a descrip­tion of our invest­ment process and how we tai­lor it to meet your risk and return requirements.

Cre­at­ing Your Portfolio

Under­stand­ing your invest­ment objec­tives: The first steps in cre­at­ing your port­fo­lio are clearly defin­ing your invest­ment objec­tives and under­stand­ing your resources. For some, this may involve a com­pre­hen­sive wealth man­age­ment plan. For oth­ers it might result in a finan­cial model that charts the path to achiev­ing a spe­cific goal, such as the desired level of retire­ment income.

Estab­lish­ing your portfolio’s Min­i­mum Accept­able Return: Once your goal is defined, we deter­mine the Min­i­mum Accept­able Return (MAR) of your portfolio—the per­for­mance needed to achieve your objec­tives in light of many vari­ables, includ­ing your tol­er­ance for invest­ment risk. We start by esti­mat­ing the low­est risk/return rela­tion­ship among asset classes that is most likely to attain your goals. We call the return com­po­nent of this model your MAR.

To deter­mine your MAR, we use an ana­lyt­i­cal, sta­tis­ti­cal model to esti­mate the effect of invest­ment risk. The model helps us cre­ate a data­base of the pos­si­ble finan­cial out­comes of key vari­ables such as infla­tion, risk, invest­ment return, Social Secu­rity, pen­sion, and con­tin­u­ing con­tri­bu­tions to your port­fo­lio. Once we find the appro­pri­ate risk/return rela­tion­ship, we begin the process of devel­op­ing a port­fo­lio using mean-variance opti­miza­tion, an algo­rithm for com­bin­ing types of invest­ments to pro­duce a port­fo­lio with the great­est prob­a­bil­ity of suc­cess at the low­est risk.

Estab­lish­ing your portfolio’s Min­i­mum Required Cap­i­tal: Your Min­i­mum Required Cap­i­tal (MRC) is the sum of money nec­es­sary to fund your life­time income needs. It is a basic piece of infor­ma­tion needed to develop a risk pro­file and know­ing it will help guide all sub­se­quent spend­ing, gift­ing, estate plan­ning and invest­ment deci­sions. Your MRC changes as you age and is depen­dent upon the per­for­mance of your invest­ments. It is some­thing we recal­cu­late often.

Select­ing and Man­ag­ing Investments

Once the mod­els are run and your unique num­bers cal­cu­lated, we cre­ate your port­fo­lio, then select and man­age your invest­ments. Assets are invested accord­ing to each client’s per­sonal Invest­ment Pol­icy State­ment and pro­por­tioned in a way that will reduce risk, with the great­est like­li­hood of success.

First, we cre­ate a strate­gic port­fo­lio as a base­line and then we imple­ment tac­ti­cal changes.

Strate­gic port­fo­lio: The strate­gic, or basic, port­fo­lio is intended to set the fixed income and equity weight­ing, as well as the allo­ca­tion of money to each major sec­tor, invest­ment style, mar­ket cap­i­tal­iza­tion seg­ment, and inter­na­tional allocation.

Tac­ti­cal or imple­men­ta­tion port­fo­lio: Our next step is to sub­sti­tute actual invest­ments for the generic asset classes in the strate­gic port­fo­lio. We invest in stocks, bonds, EFTs (Exchange Traded Funds), mutual funds and real-estate-related secu­ri­ties.

Each requires a dif­fer­ent eval­u­a­tion method­ol­ogy, but in all cases our process fol­lows these steps:

• Top-Down Eco­nomic Analysis
• Mod­i­fied Sector-Neutral Allo­ca­tion Strategy
• Bottom-Up Secu­rity Selection
• Mutual Fund Selection

Cus­tody of Assets

We do not have cus­tody of your funds. We will assist you in open­ing an account with an inde­pen­dent cus­to­dian such as Charles Schwab & Co., Inc., Fidelity Invest­ments, or a trust depart­ment. You retain own­er­ship and con­trol. How­ever, you autho­rize us to make invest­ment deci­sions for your account. The account is in your name. You will receive a monthly state­ment from the cus­to­dian list­ing the assets held in your account and the trans­ac­tions dur­ing the month. You will also receive a quar­terly report from us which will cal­cu­late the rate of return earned dur­ing the quarter.
Advanced risk man­age­ment strategies

Effec­tive risk man­age­ment is an inte­gral part of our port­fo­lio man­age­ment. Risk man­age­ment should not only focus on what has hap­pened in the past, but also what could hap­pen in the future. Diver­si­fi­ca­tion alone will not pre­vent losses dur­ing a sub­stan­tial mar­ket decline since in the past, most asset classes have moved down­ward together.

For this rea­son, we employ six strate­gies to help pro­tect your port­fo­lio while build­ing it.

1. Active port­fo­lio management
2. Active stop-loss limit (optional on all of our portfolios)
3. Screen­ing for cor­po­rate malfeasance
4. Min­i­mum Required Cap­i­tal (MRC)
5. Mean-Variance Opti­miza­tion (MVO)
6. Min­i­mum Accept­able Return (MAR)