Over the years, I’ve witnessed a major shift in the world of investing. Too often, investors and even advisors fall prey to the hot stocks of the moment or chase returns, rather than focus on creating structured investment strategies and educating clients. As a result, many people’s portfolios don’t accurately align with their comfortable level of risk and they aren’t earning long-term market rates of return.
At Private Client Wealth Advisors, we consider it our responsibility to our clients to take a structured and data-driven approach to investments. Avoiding short-lived investment fads, we instead focus on market efficiency, research, and sound economic philosophies. One resource we utilize to help us accomplish this is Dimensional Fund Advisors (DFA).
Who is Dimensional Fund Advisors?
Private Client Wealth Advisors is among a select group of advisors that have a relationship with Dimensional Fund Advisors (DFA) to offer their funds. The portfolios developed through DFA are highly customized, taking each client’s risk preferences, tax situations, and lifetime objectives into account. While stockbrokers may focus on chasing returns and taking risks in hopes of rewards, DFA focuses on offering a full range of equity and fixed income strategies designed to target higher expected returns. Our clients’ assets are more than just shares in a portfolio or dollar signs on a spreadsheet; they represent each client’s hard work and the dreams they entrust to us and DFA.
Dimensional fund shares are not available directly to individuals but are limited to clients of a select group of approved financial advisory firms. We are proud to be one of these selected advisory firms. We work with Dimensional Fund Advisors because we follow the same investment philosophy:
- Keep investment fees low
- Maintain broad diversification among classes
- Reduce turnover
- Angle portfolios toward dimensions that have higher expected returns
- Remove human interference from security management
Why We Chose DFA
We consider Dimensional Fund Advisors as an investment in due diligence for our clients. Several years ago, I spent a couple of days at DFA Corporate offices in Austin, Texas and, over the years, I’ve attended their regional meetings as well. DFA has a unique offering and when working to develop your personalized investment portfolio, we believe in and follow the key principles from DFA. As risk and return are related, we take the proper steps to determine how much risk you are willing to take in the pursuit of higher returns.
We then customize your investment strategy to align with your risk tolerance and time horizon. The goal is for your wealth to grow according to your personal financial plan, and how we structure your portfolio can help determine its performance. Because we believe diversification is essential for reducing risk, we review and consider a mix of stocks, bonds, and other investment options to diversify your portfolio.
Finally, we rebalance to add value. As the markets shift and your goals change, so will your investment strategy. We continuously monitor your portfolio and rebalance as needed to ensure your portfolio is up-to-date.
While we work with DFA, it’s important to remember that, as an independent firm, we don’t receive any perks from DFA, we do not exclusively work with them, and we are objective in our recommendations, even if that means choosing a company that isn’t DFA.
The Benefits of DFA
DFA’s approach and investment philosophy has served them well, helping them rise to the top of portfolio managers. Starting in 2014, DFA joined the ranks of a small group of managers surpassing Fidelity Investments and Capital Group in terms of fast-growing U.S. mutual fund firms. And according to a July 2014 Cogent Reports survey, DFA received the highest grades in customer loyalty among mutual fund companies.
We believe much of this success has to do with their unconventional but research-backed approach to investing, and their vetting of advisors. DFA hand picks advisors based on a shared investment philosophy and commitment to data-driven strategies.
Our relationship with DFA allows us to offer a wide array of products and leverage relationships that our clients might not otherwise have access to. We seek to adequately and efficiently serve our clients and DFA is one way we do that.
Understanding Our Investment Philosophy
It’s important to understand your advisor’s investment philosophy and how products are chosen for your portfolio. If you haven’t reviewed your portfolio in over a year, are concerned your investments don’t align with your goals, or want to learn more about how we invest and use Dimensional Fund Advisors, let Private Client Wealth Advisors help. We like becoming a part of families’ executive team, sitting side by side with them as they navigate their financial journey. Contact us by phone at 303-945-2222 or email us at firstname.lastname@example.org to set up a consultation or portfolio review.
Barry Steelman, AIF® is the Founder, Principal, Managing Partner, and Client Advocate at Private Client Wealth Advisors, a registered investment advisory firm based in Denver, Colorado. He specializes in working with individuals, families and businesses and conducting financial planning, portfolio management and retirement plan services. Along with more than two decades of experience, he is an Accredited Investment Fiduciary®, which signifies knowledge of fiduciary responsibility and the ability to implement policies and procedures that meet a defined standard of care. Learn more about Barry by visiting www.privateclientwealthadvisors.com or connecting with him on LinkedIn.