Private Client Services. Investment Management

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1 Private Client Services Investment Management

2 Custom Portfolios For a Complex World We live in an unpredictable and complicated world. Over the course of the last several years, we have seen the markets experience tremendous volatility, which has had a significant impact on investors ability to protect and grow their assets. A great number of events, from natural disasters to man-made crises, have affected world markets, increased volatility and made it more difficult for investors to remain on course to reach their financial objectives. I N V E S T M E N T M A N A G E M E N T

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4 Starting with the technology bubble in 2000 and continuing with the housing bubble just a few years later, never before have investors faced the consequences of two pricing bubbles in such close proximity. While the impact from the economic and financial downturns left a lasting scar on our psyches for generations to come, it also provided us with money management lessons for this new era. We believe volatility is here to stay, which makes it increasingly important to employ investment strategies that guard against the potential for sudden and unexpected peaks and valleys in the markets and how they may negatively affect your portfolio. Devising an Investment Approach That s Right for You Investment management is a significant component of our Private Client Services comprehensive wealth management offering, and we take a highly personal and customized approach to managing your money. In today s investment landscape, the only certainty is that nothing is certain. The increasing complexity of economic forces and the interdependence of global markets have contributed to significantly alter the investment landscape. We feel that investors can no longer necessarily rely on traditional strategies to reach their financial goals. I N V E S T M E N T M A N A G E M E N T

5 13 WEALTH MANAGEMENT ISSUES Investments Insurance Liabilities (debt) Retirement Plans Stock Options Business Succession Gifting During Life & at Death Philanthropy Titling of Assets The current market environment poses new hurdles for investors: unprecedented volatility, economic forces putting pressure on equity markets, the prospect of a resurgence in inflation and rising interest rates, all compounded by unfavorable demographic trends for most of the developed world. In short, to paraphrase an old saying, in today s investment landscape, the only certainty is that nothing is certain. While all investors are different, you require a sophisticated, risk-managed approach to wealth preservation, income generation and long-term capital appreciation from your investment portfolio. Choice of Executor Legacy Planning Charitable Inclination Durable Power of Attorney A Flexible Approach Consistent with our Private Client Services philosophy, risk management forms the foundation of our investment approach. We serve investors whose wealth affords an increased capacity to tolerate risk, yet at the same time, a diminished need to incur it in order to achieve their goals and

6 objectives. Our portfolio construction and implementation process focuses on managing the downside and utilizes many of the concepts and strategies employed by large endowments and institutional investors. We feel that the secret to long-term outperformance lies in the ability to protect capital in order to grow it. In other words, we feel it is more important to manage against losing money than to take more risk in order to reach for extra return. At the same time, we recognize that no one investment strategy works for every client, so we have developed an investment approach that allows for flexibility. Based on an understanding of your needs and constraints developed through a series of personal meetings, we ll create a custom strategy that takes all of your concerns into account and is integrated with your broader financial plan. In order to devise your personalized strategy, we start by understanding our mandate based on your objectives for the portfolio. This typically will follow a Growth, Defense, or Income orientation for investment accounts. Next, by understanding your time horizon, return objectives, and attitudes toward volatility, we determine an appropriate risk tolerance level for the portfolio. Finally, we factor in your tax situation and unique personal circumstances, including legacy holdings, to build an investment portfolio that s tailored just for you. Establishing a Solid Foundation We believe that sound portfolio structure and investment management are complementary and crucial to sustaining and growing wealth as well as creating income. Each client s custom solution is managed to reflect our core philosophy on risk, leverage our strengths, I N V E S T M E N T M A N A G E M E N T

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8 and adhere to a structured methodology. The lynchpin of our investment strategy is the portfolio construction process, which relies on three key elements: 1. Strategic Diversified Allocation: While we acknowledge some of the challenges that traditional diversification has faced, this fundamental risk management technique is as important now as ever. We view a well-diversified portfolio as our client s first line of defense. As a result, our portfolios have consistent exposure to a broad array of investment classes. 2. Tactical Management: Market conditions change so we think it is important for your portfolio to be able to adjust as well. We take a constrained approach, which means I N V E S T M E N T M A N A G E M E N T

9 the allocation can pivot between a more bullish or bearish orientation within certain pre-determined guardrails. We believe that strategies that go all-in or all-out are actually introducing risk to the portfolio rather than managing it. As a result, our focus is on getting the asset allocation and underlying themes correct through a series of disciplined overweight and underweight portfolio adjustments. Our thematic approach starts with a market outlook and an analysis of potential risks. We then tilt the portfolio to take advantage of these themes while also trying to protect against perceived hazards. 3. Smart Sourcing: Between our strategic core and tactical themes, we arrive at a target allocation. The final, and we think most important step, is how to fulfill, or source, that target allocation. To achieve a level of diversification that can be effective in today s complex economic environment, how we pick managers and investment vehicles is essential in attempting to minimize the negative effects of volatility and help achieve your objectives. In other words, it s not enough to spread your investment risk across a broad variety of asset classes. We believe that asset sourcing knowing which managers, vehicles, and/or securities offer the optimal exposure to a segment of the market and how they interact with each other is critical to constructing your portfolio. With this construction in mind, your portfolio is then implemented in the most optimal manner by determining which accounts hold the various investment pieces. We think that a key warning sign of a poorly integrated plan is very similar investment allocation for accounts with very different income-tax or estate-planning objectives. There can be no shortcut to successful planning that minimizes important considerations for the sake of simplicity.

10 The Private Client Services Experience Our exclusive portfolio design services are available to high-net-worth investors seeking comprehensive investment solutions and personalized service. Our disciplined approach is designed to try to enhance total portfolio results for each client while controlling risk across all market cycles. Similar to a family office manager, our group evaluates the complete picture to implement a customized strategy designed with your unique financial goals in mind. We believe a disciplined process, combined with accessibility to portfolio managers and other subject matter experts, can potentially yield the best results. Investment advice and management is a complex process and requires a team of advisors and specialists who possess the experience and educational background to stay current in today s ever-changing investment world. If you prefer to leave day-to-day investment decisions to a highly credentialed team of portfolio managers that constantly thinks about how the unfolding macro environment impacts your path to your goals, then our Private Client Services investment management solution could be the right approach for you. First Allied Asset Management is a registered investment adviser and wholly owned subsidiary of First Allied Holdings Inc. First Allied Holdings is a holding company conducting financial services business through the following registered entities: First Allied Advisory Services, Inc., a registered investment adviser First Allied Securities, Inc., a registered investment adviser and broker-dealer. Member FINRA/SIPC First Allied Asset Management, Inc., a registered investment adviser Legend Advisory Corporation, a registered investment adviser Legend Equities Corporation, a registered broker-dealer. Member FINRA/SIPC First Allied Asset Management provides investment management and advisory services to a number of programs sponsored by the above affiliates, including the Allocation Series, Manager Series, Private Client Services, and VIP programs. The First Allied Asset Management individuals that provide investment management and advisory services are not associated persons with any broker-dealer. Investment adviser representatives of First Allied Advisory Services, Inc. who are registered representatives offer securities through First Allied Securities, Inc., a registered broker-dealer. Member FINRA/SIPC. Advisory services offered through First Allied Advisory Services, Inc. Nothing in these materials shall be construed as offering or disseminating specific investment, tax, or legal advice to any individual without the benefit of direct and specific consultation with a First Allied Advisory Services advisor or any affiliate of First Allied Advisory Services. Past performance is not a guarantee of future results. I N V E S T M E N T M A N A G E M E N T

11 PRIVATE CLIENT SERVICES 655 W. Broadway, 12th Floor San Diego, CA First Allied Advisory Services, Inc. All rights reserved.