Portfolio Managed Accounts (PMA)
Portfolio Managed Accounts are perfect tools for individuals who wish to have their money fully managed by an investment professional. These accounts differ from asset-managed accounts and traditional commission based trading accounts in that day-to-day trading decisions and portfolio allocations are made at the discretion of the portfolio manager, which utilizes our investment process, resulting in a much more efficient client experience.
All PMA accounts are structured as fee-based accounts, and can provide a very cost-effective way to have your money professionally managed. The ability for the portfolio manager to enter and exit positions quickly allows them to be nimble and react/take advantage of market conditions to the maximum effect for you, the client. Two excellent examples of this is a) the ability to build a position over time, as opposed to buying a full position in one go in order to not have to charge the client for multiple trades, and b) the ability to block trade for PMA accounts, which means that all clients who we are performing an action for on a position get the same price of execution.
Moreover, the fee-based cost structure provides a strong linking of interests between the portfolio manager and the client, and the Investment Policy Statement (IPS) provides a higher level of understanding and communication between ourselves as the investment managers and you, the client, as the IPS is a far-more detailed outline of your risk profile, and asset allocation parameters.
The Client Experience
What can you, the client, expect from Twyman Wealth? You can expect a personalized and thorough process. The first step, the foundation, is a two-step process. First, we will have an introductory meeting where we will work through an investor questionnaire. This document will help us to go over your financial goals, risk profile, and risk tolerance with you. This step will be followed by the development of a personalized Investment Policy Statement, tailored to your goals, constraints, and specific risk appetite as determined through the questionnaire. This personalized Investment Policy Statement (IPS) will outline the guidelines and strategies that will be used in the handling of your accounts. The IPS will define such things as: personal cash needs presently and in the future, the overall portfolio asset allocation and acceptable deviation ranges, the possible uses of margin, the types of investments allowed and not allowed in the portfolio, as well as the types of options strategies allowable on the portfolio, and the development of an acceptable and representative benchmark for the portfolio to be measured against.
The second aspect of the client experience is the communication between us, the portfolio managers, and yourself, the client. This communication is done through scheduled portfolio reviews and update calls. We recognize that every client is different, and each client has their own views as to what sort of communication level is optimal for them. As such, during the construction of the Investment Policy Statement, there will be the setting of the time period of official reviews for the portfolio and the IPS, as well as the determination of scheduled calls with brief updates. This allows you the client to determine a regular interval to speak with us that leaves you feeling comfortable and up-to-date with the market and your holdings.
Our Investment Process
How do we invest? Upon completion of an Investment Policy Statement that is suitable for you, we will proceed with the building and maintenance of your portfolio. This is an extensive process that involves the actual security and product selection, the monitoring of all existing positions from a fundamental and technical level, and the rebalancing of the portfolio to ensure that the portfolio continues to match with the asset allocation and risk philosophies agreed to in the IPS.
We have a systematic approach to producing investing ideas and determining the value of a company. Our first step to generating investment ideas is the use of an appropriate negative screen suited to your risk tolerance and investment goals. A negative screen allows us to essentially filter out companies that don’t exhibit core fundamental factors, such as a minimum market capitalization, or positive earnings. This screen leaves us with a list of companies that we use for our second step.
The second step we use is a fundamental ranking model, where we use the filtered list of companies and rank them based on over 20 fundamental factors, ranging from dividend yield to debt levels to cash flow growth. This method allows us to rank the companies by the qualities that we deem important in the way we view companies.
The third step is the development of price targets and fair fundamental values through financial modelling and forecasting. This allows us to dig deeper into these companies as a means of determining if we want to own the company, and at what prices we would be looking to buy and sell.
The final step in the process is a large part of our value add. This is the implementation and timing of trades in the account, as well as the implementation of an option overlay strategy on the portfolio. The main reasoning for this step is our belief in the risk reduction and yield enhancement benefits that can be gained through the use of options on portfolio holdings. During the IPS process, we will work with you to educate you on the potential advantages and disadvantages of different option strategies, as well as to lay out the types of strategies allowable in the portfolio.
We would be glad to speak with you in more detail regarding our Portfolio Managed Account program and how it can become a viable solution for you. Please go to our Contact Us page for the best ways to reach out to our team.