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BluePrint Wealth Alliance: Investment Beliefs

Our 5 Core Investment Beliefs are the result of many years of research and working with hundreds of clients who yearned for a better way. They are truly the engine that powers the robust and dynamic BluePrint Wealth Alliance investment platform.

 

BELIEF #1: EMOTION SHOULD BE REMOVED FROM THE INVESTMENT PROCESS:

“THE INVESTOR’S CHIEF PROBLEM AND EVEN HIS WORST ENEMY IS LIKELY TO BE HIMSELF.” BENJAMIN GRAHAM

The “Fight or Flight” response has proven remarkedly effective at aiding human survival. Our ancestors used this primal trait to survive harsh conditions and dangerous adversaries. Even today, it continues to be a key behavioral response when one is faced with a perceived threat.

Unfortunately, while this response does wonders for protecting us from danger, it can be a detriment to long-term investors by leading to bad investment decisions driven by emotions, like fear and greed. Ill-timed investment decisions driven by emotional or in response to the news of the day often leads to long-term underperformance. This underperformance phenomenon, sometimes referred to as the “behavior gap”, has the potential to derail the most well thought out investment plans. It may be among the more compelling reasons for you to seek professional investment guidance.

BluePrint is deeply committed to the study of behavioral finance, a relatively new field that combines psychological theory with finance. This information helps us to explain why people make the financial decisions they do. Armed with that knowledge and an unbiased, evidence-based approach to investing, we believe our team is well positioned to help you avoid behavioral pitfalls, and to both persevere and prosper through future market cycles.

 

BELIEF #2: YOU SHOULD INVEST TO ACHIEVE YOUR GOALS

“AT THE END OF YOUR LIFE, SAYING ‘I BEAT THE S&P BY 3 PERCENT’ DOESN’T MEAN ANYTHING, BUT IF YOU SAY, ‘I INVESTED WELL, I HAD A NICE HOUSE, MY KIDS WENT TO A GOOD SCHOOL,’ THAT’S SOMETHING.” Ashvin Chhabra

“You should invest to achieve your goals.” It sounds silly, right? After all, who wouldn’t do that? As it turns out, the answer might surprise you. Traditional investment approaches often focus on outperforming a specific benchmark, market index or similar measure of performance. These approaches tend focus on selling an investment product or story, as opposed addressing the underlying reasons why you’re willing to accept some of the risk of the markets to try and grow your assets.

In contrast, when you invest to achieve your goals, success or failure is defined as how closely you’re tracking to achieving each of those goals. This process also recognizes that sometimes your risk tolerance and objectives may not be in line with your portfolio.

In lieu of offering a one- or few-size-fits-all approach to investment recommendations where you’re simply slotted into a “conservative,” “moderate” or “aggressive” portfolio, our goals-based approach focuses on creating the unique allocation that’s works for you. Our Wealth Managers typically analyze specific objectives, personal biases, investment preferences and unique circumstances prior to offering portfolio construction advice, we believe will best help you achieve your goals.

Our optimal result is a portfolio allocation that aligns your financial objectives to specific investment accounts and strategies. Through goals-bases investing, we believe that we can offer the realistic expectations that will allow you to stick with your strategy for the long-term.

 

BELIEF #3: COST INEFFICIENCIES HURT INVESTORS

“THE MIRACLE OF COMPOUNDING RETURNS IS OVERWHELMED BY THE TYRANNY OF COMPOUNDING COSTS.” JOHN C. BOGLE

At BluePrint, we aim to provide service at the optimal cross-section of cost and value. If you’re just looking for the absolute lowest cost option, then frankly, BluePrint is probably not the right fit for you. But if you’re looking for high-quality financial planning, a robust investment platform and quality service you can depend on at an affordable price, then you’ve come to the right place. And all delivered by a dedicated team of experienced and highly credentialed industry veterans.

You also should look carefully at the costs of the actual investments your advisor recommends. When evaluating portfolios, we often find high fees, questionable investments, and products that offer little to no value in comparison to lower cost, similar alternatives. Oftentimes, these investments have been selected not because they are best for you, but merely because they offer back-door payments or bonuses to the advisor or firm recommending them, simply put, we believe that’s wrong.

Our executive team and investment committee have designed BluePrint’s offerings to emphasize a fair, flexible, and transparent pricing framework. BluePrint’s internal research protocols include robust screening of an investment’s true cost and our portfolios are focused on lower cost investments, such as exchange traded funds, individual securities, and institutional class mutual funds.

BluePrint’s focus on managing costs extends to our custodial partners as well. Our clients can choose to custody assets at either Charles Schwab or TD Ameritrade, both regarded by investors for decades for their excellent service and for their low-cost investment platforms.

At BluePrint, we aim to provide service at the optimal cross-section of cost and value.

 

BELIEF #4: DOWNSIDE RISK MANAGEMENT MATTERS

“THE MOST IMPORTANT THING TO DO IF YOU FIND YOURSELF IN A HOLE IS TO STOP DIGGING.” WARREN BUFFETT

We know you want to see your hard-earned money work for you and grow over time. We want that too. But while we strive to achieve strong returns for our clients, an emphasis must also be placed on protecting against downside exposure and the potential loss of your principal. Our experience has taught us that this bias toward risk management is important for both psychological and mathematical reasons.

Decades of research have shown that humans are hard-wired to feel the pain of loss more than the joy of gain. This disproportionate response can test the most seasoned investor’s resolve to keep emotion out of the investment decision-making process.

Even the most steadfast of investor can’t get around the math of large losses though. As your portfolio drops in value, the returns required to break-even increase exponentially. For instance, if your portfolio loses 10% in a market decline, it would take you just a little more than a 10% return – 11.1% to be exact – to get back to even. But lose 50% in the same dip and you’ll have to double your money with a 100% return to get you back to even! And if you’re a retiree and in the “spenddown phase” when these losses hit, it can be even harder to get back to even.

Loss Return Needed to Break-Even
5% 5.3%
10% 11.1%
15% 17.6%
20% 25%
25% 33.3%
30% 42.9%
35% 53.8%
40% 66.7%
45% 81.8%
50% 100%
60% 150%
70% 233%
80% 400%
90% 900%

 

BELIEF #5: TRADITIONAL DIVERSIFICATION ISN’T ENOUGH

“THE ONLY INVESTORS WHO SHOULDN’T DIVERSIFY ARE THOSE WHO ARE RIGHT 100 PERCENT OF THE TIME.” JOHN TEMPLETON

Most investors understand that diversification is an important element of creating an efficient portfolio. For many investors, though, that diversification begins and ends by investing in different asset classes, such as stocks, bonds, real estate, and cash. There’s nothing inherently wrong with this approach, but we believe there’s often more to the puzzle.

Our experience has taught us that many investors benefit not just from the traditional diversification described above, but also from diversification of investment types (individual securities vs. exchange-traded funds (ETFs) vs mutual funds) diversification of holding strategies (tactical vs. passive) and diversification of tax characteristics (taxable vs. tax deferred vs. tax free).

To help enable our clients to achieve this “diversification-plus,” our investment committee has built over 50 strategies and portfolios that may be blended together to meet your unique needs.

Access to a diverse array of investment types including:
  • Stocks
  • Bonds
  • ETFs
  • Highly Rated Institutional Mutual Funds
  • Options
  • Fixed Insurance Products
  • FDIC Deposit Products
Access to a diverse array of investment strategies including:
  • Strategic Allocation
  • Tactical Allocation
  • Income Focused Strategies
  • Individual Equity Focused
  • Hybrid Approaches
  • Hedged Approaches
  • Option Strategies
  • Customized Portfolio Monitoring
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