It’s All About the Fit: Why You Need a Tailored Investment Strategy

Mar 19 2024 | Back to Blog List

Unless you’re naturally gifted with a physique like a runway model, you’re probably not able to buy and wear business clothing right off the rack. It takes a visit to your (top-secret) tailor to have that suit or that dress dialed in, so it fits like a glove.

There’s a sense of confidence and control that comes with a well-tailored outfit—maybe you still have that “power suit” that helped you get the job or close the sale at the back of your closet.

Here at Cedar Point Capital Partners, we believe you should get that kind of feeling from your financial plan, too. That’s why we specialize in creating tailored investment strategies for our clients that factor in so much more than just risk tolerance or time horizon.

It’s about offering bespoke investment recommendations and insights that fit your life perfectly. That gives you real confidence you can wear, day in and day out.

But what is a “tailored investment strategy,” anyway, and how does it compare to the mass-market models pitched by many brokers and non-fiduciary advisors today? Let’s dig into it a bit.

What is a tailored investment strategy (and what is it not)?

As the name suggests, a tailored investment is one that has been researched and selected to fit your exacting specifications, goals, and requirements. A tailored investment strategy brings all these custom investments together, with the aim of constructing an optimized, diversified framework that maximizes performance and minimizes volatility over time.

It takes a lot of time and effort to build this kind of strategy, because every investment decision is carefully weighed across multiple data points. Those can include:

• Your long-term goals and vision. Every investment you make needs to align with your plan. Are you aiming for long-term growth, income, or capital preservation?
• Your personal beliefs and desires. What moves and drives you? What keeps you up at night? Your investment approach should respond to all of it.
• Asset allocations. How does a specific investment fit in with your existing allocations? Do bigger adjustments need to be made to retain the proper diversification?
• Risk profile. How comfortable are you with market fluctuations and potential losses? How has your openness to risk changed over the years?
• Risk-return trade-offs. Is the risk of a specific investment worth the potential return it represents for your portfolio? Are there safer options that still offer a similar upside?
• Time horizon. How long do you plan to hold the investment, and what’s your exit strategy at the end?
• Investment quality. We’ll look at fundamentals like historical performance, management quality, fees, and liquidity.
• Tax efficiency. We will evaluate the tax implications of every investment, and optimize your broader portfolio to minimize tax drag.
• Costs and fees. There are often added expenses associated with investments, especially alternative investments like real estate or private equity.

If this level of detail sounds like what you would expect from a fiduciary investment adviser or wealth manager, we’d agree with you. But you should know that level of care is often treated as lip service in the financial industry—mostly because it takes hard, dedicated work to tailor investment strategies to this level. That’s why most advisors and brokers rely on mass-produced model portfolios and allocations, tweaked just enough to make them seem personalized.

The “tailored” terminology is everywhere these days, but the devil is in the details. It’s important to ask a lot of questions of your adviser before you begin a long-term relationship, to understand exactly how they are researching and building your investment strategy. What expertise and financial tools are they bringing to bear? What evidence-based research are they influenced by?

We started Cedar Point Capital Partners because we knew our wealth management clients required more sophistication and flexibility in their investment strategies. That’s why we do all of our research in-house, with the latest financial analysis tools, so we can examine and recommend options from the vast universe of investment possibilities available now. It’s part of our fiduciary promise to our clients, and our commitment to giving you a strategy that reflects you.

The benefits of well-tailored investment strategy

We believe the benefits of our tailored approach are more than worth the added time and effort it takes to build our strategies for clients, but what specifically can you expect from this level of effort? A few of the tangible benefits we’ve seen for our clients include:

• Optimized returns. A tailored investment strategy is about applying added rigor and analysis to find opportunities missed by the masses. By adding calculated risk to your portfolio that others do not and avoiding unnecessary fees and expenses, you can add alpha without sacrificing stability.
• More accurate risk management. Many brokers approach risk simplistically, doling out pre-set allocations of stocks and bonds that correspond to that short risk questionnaire you filled out when you first sat down. A tailored investment strategy digs deeper, evaluating how specific components influence the risk your portfolio is taking, and leveraging a wide range of investments to insulate your assets.
• Greater alignment with your goals and time horizon. Whether your goal is short-term (buying a house), medium-term (children’s education), or long-term (retirement and philanthropic giving), you can rest easier knowing your investments have been specifically selected to maximize returns over that time.
• Greater alignment with your personal code. Maybe you have strong personal or moral beliefs about the types of companies you want to invest in. We have clients who do not want to invest in gunmakers or oil companies, for example. A tailored investment strategy can reflect your deepest values in a way off-the-shelf models cannot.
• Improved tax efficiency. Tailored strategies almost always incorporate tax-efficient investment vehicles or techniques to minimize tax liabilities, such as utilizing retirement accounts, tax-loss harvesting, or strategic asset location. Model allocations and target date funds overlook this critical piece of your financial puzzle.
• Increased mental peace. A thoughtful financial strategy, tailored to your specific needs, gives you the ability to let go and stay grounded in the face of uncertainty and extreme market events. Mass-market models don’t inspire that same feeling of confidence, because everyone is riding the same rollercoaster.

A closing note

Know that a tailored investment strategy is not a fixed point in time, but rather a plan that should evolve with you. Even a perfectly built plan needs to be continuously monitored and adjusted when market conditions or life contingencies require it. Working with a boutique wealth management firm like Cedar Point Capital Partners gives you the flexibility to do just that.

By combining sophisticated financial analysis with a deep understanding of your needs, we can deliver investment recommendations that optimize your financial outcomes and empower you to achieve your broader life goals with confidence.

If “clothes make the man,” your investments make your future. Reach out today and let’s make a plan for yours.

 

 

 

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