Our Services
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Asset Management Advisory “Look, there are the bankers’ and brokers’ yachts”. The naďve customer asked: “Where are the customers’ yachts?” —Fred Schwed, Jr., “Where Are the Customers' Yachts?”
At Fischer & Hutchinson Wealth Advisors, LLC our goal is to help our clients build and manage wealth over a lifetime. At the core of our Investment Advisory Services is the premise that investors need a highly disciplined and cohesive financial strategy. Fischer & Hutchinson utilizes the Nobel Prize-winning Modern Portfolio Theory (“MPT”) in the design of our clients' investment portfolios. MPT refers to an investment technique which suggests that each investment should be considered for its effect on the overall portfolio. A wisely chosen portfolio will tend to maximize expected long-term return for a specific level of risk/volatility or, equivalently, minimize risk/volatility for some expected long-term return. MPT is the winning approach to investing for which Harry Markowitz won the 1990 Nobel Prize in Economics.
Don't believe the Lies, Myths, Fairy Tales and Legends created by the propaganda machines of Wall Street---What Jane Bryant Quinn calls "investment pornography". Our investment philosophy is based on Modern Portfolio Theory and is centered on the following principles:
While past performance is the guideline most often used by the active investment community in selling future performance, most available data not only shows that past performance is of no value in selecting superior performing investments in the future, but also concludes that above average performance in the past often turns into below average performance in the future.
The asset allocation decision (the percentage of our portfolio we invest in various asset classes, such as US Large Cap, US Small Cap, International Large Cap, International Small Cap, Real Estate, Commodities, and Fixed Income) is the most important factor determining investment return based on historical financial studies.
Markets process all available information so rapidly to determine the price of any security that it is statistically improbable to gain a competitive edge by exploiting the occasional anomalies. This means that to “beat the market”, an investor would have to possess not only the correct insight or information regarding a specific security, he would have to be only one of a few investors to possess it, and he would have to do this consistently over time.
Numerous, well-documented academic studies have confirmed that an investor’s return is overwhelmingly dependent on the amount of exposure to the specific risks associated with the various asset classes. Over time, riskier assets have historically provided higher expected returns as compensation to investors for accepting the greater risk. This is the basic concept underlying the Nobel prize-winning strategy that has become the new legal standard for prudent investing by fiduciaries.
Adding low-correlating asset classes, even if they carry a higher risk on their own, can actually reduce overall volatility on a portfolio level, and increase expected rates of return. By intentionally designing portfolios to incorporate various degrees of exposure to different asset classes, we can help investors to create the most efficient (highest expected return) portfolio for the level of risk they are willing to assume.
Active management is expensive and these expenses reduce investment returns. Active managers are expensive in terms of fees and salaries. The associated high turnover of securities creates trading costs and higher tax liabilities that are also passed along to the individual investors. Active portfolio managers are also susceptible to style drift, a commonly observed trait of skewing a portfolio’s asset allocation to chase recent high performance of specific securities.
Because we hold steadfast to these beliefs, our clients’ portfolios are constructed primarily employing asset class-index mutual funds, exchange traded funds, and individual fixed income securities. Portfolios typically include a combination of some or all of the following asset classes in both domestic and foreign markets:
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