What Really Goes On In My Investment Portfolio?

Just like at any fine dining restaurant, the client experience is all about the enjoyment of the meal and never about the hard work that goes on in the kitchen! While total transparency isn’t encouraged in many industries, at Clear Direction we like to get things out in the open. In this newsletter, we bring you a behind-the-scenes glimpse of what really goes on in an investment portfolio when managed by our investment manager partners at Stonebridge Capital Advisors. We interviewed John Schonberg, portfolio manager and Chief Investment Officer, to gain his view on the benefits this team approach brings to our clients.

How exactly is Stonebridge involved with what Clear Direction does?

Stonebridge Capital is an RIA, or Registered Investment Advisor, firm. In a nutshell, we partner with your financial advisor Randy Stoltz to do the actual managing of the money. We use separately managed accounts, which is basically where each client has their own customized portfolio that consists of individual stocks and bonds that when combined together meet their investment objectives, not just the objectives of a fund that everyone is pooled in to like a “mutual fund.”

How do you manage through market fluctuations?

The process begins when the three of us (Randy, the client, and I) sit down and look at their risk tolerance and personal objectives. From there we come up with an asset allocation that spells out different bands that we must stay within for each asset class, or type of asset (domestic stock, international bond, etc.)

When the market fluctuates, we have the ability to make investment decisions that keep the portfolio within those tolerance bands. The important thing here is that in the beginning we make a concerted effort to make sure that Clear Direction Investments, Stonebridge, and the client are all on the same page regarding the overall objective of the account. We find that if we do that, these situations become much more manageable.

What about tax efficiency?

When you invest in mutual funds, they are required to pay out their capital gains at the end of the year.

The client’s specific situation has very little to do with the tax they pay. That might be acceptable for an IRA or 401K, but not an individually managed account. Separately managed accounts offer the client the flexibility to manage taxes in accordance within their personal parameters. For example, when we have a client who already has an account with a significant amount of capital gains, we slowly transition this portfolio into our current recommended holdings model. We take into account where they are today instead of just turning over that portfolio 100%.

What makes this beneficial for the client is that we pay close attention to what a client already owns with an eye towards where they need to be eventually. Our focus is on the end result of having them recognize an acceptable amount of capital gain each year. Because we own individual stocks and bonds, we have complete control over when we/they want to realize capital gains and losses.

Who do I call if I have a question?

Randy Stoltz is your primary contact and your first call should be to him. For example, if the market has a huge blip one day, reach out to Randy first. If for some reason he’s unavailable (which is usually not the case), of course I’m willing to take the call and after we talk I will let Randy know. Randy, myself, and the client generally have a quarterly call together to stay in communication about your ongoing needs.

Who does the investment research – do you do it yourself or do you outsource it?

At Stonebridge we do all the research ourselves. We have our own in-house fixed income and equity teams. They are very experienced. I joined in 2012 with 25 years of experience and I brought the average number down! As of today, we are a team of 11 portfolio managers and 8 research and support staff.

This brief article is just a glimpse. If you have further questions about how your money is managed, please get in touch with Clear Direction Investments.

This is for informational purposes only and does not constitute an offer to buy or sell an investment. Because investors situations and objectives vary this information is not intended to indicate suitability for any particular investor. This material is not to be interpreted as tax or legal advice. Please speak with your own tax and legal advisors for advice/guidance regarding your particular situation. Randall B. Stoltz offers securities through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Advisory services offered through Concorde Asset Management, LLC (CAM), an SEC registered investment adviser. Insurance provided through Stoltz Financial Partners, LLC and Clear Direction Investments, LLC, both of whom are independent of CIS and CAM