BWMG of Nest Capital, Fort Wayne IN

WEBVTT

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Hello.

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Thank you for joining us for our

video today on asset allocation.

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I'm Jeremy Swonger, financial advisor

here at Braun Wealth Management Group.

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And I'm joined here today by

our president, Byron Braun.

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Byron, thank you for being with us.

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Oh, my pleasure.

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Byron today we're going to be

discussing asset allocation.

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And can you start by kind

of telling us what it is?

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Basically, asset allocation encompasses

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three big envelopes

stocks, bonds, and cash.

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Conceptually speaking, the more bonds or

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cash you have in a portfolio,

the less the risk.

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The more stocks you have,

the greater the risk.

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But that's the big envelope.

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And we'll get into

specifics in a second here.

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Okay.

Yeah.

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Take it a little bit further for us and

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talk a little bit about what

strategic allocation is.

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Well, I'm going to show you a chart here

called the value of asset allocation from

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our friends at the Wells

Fargo investment institute.

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If I could direct you to the upper

left corner, and you'll notice 2007.

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So basically, this chart shows you the

best performing asset classes and the

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least performing asset

classes in any one period.

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So in 2007, the emerging markets had the

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best performance of a positive 39.8%.

The worst was the United States small caps

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with a negative 1.6%. That's approximately

a 40% differential in return.

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So what does the normal person usually do?

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They chase reward.

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So the premise that we have with our

strategic allocation models are we

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position the assets

for the reward ahead of time.

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So, for example, if you look in 2010 and

follow the powder blue box, it was the

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best performing class,

which was the small caps.

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And then you go down

to 2011, it was in the lowest performing

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class, and then it bounced

right back up in 2013.

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So it acted and felt very

similar to a ping pong ball.

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So what we try to do at

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Braun Wealth management group

is mix these up like a cake.

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For example, the more international you

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have or the more small caps you have, the

greater the risk, the greater the reward.

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So we can tailor make these portfolios

to have a more balanced path.

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So, again, if you look at this

chart, there is the white box.

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The white box, you'll notice basically

is in the middle all the way across.

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And that, in essence, and a brief summary,

is what strategic allocation is all about.

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Great.

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So, Byron, now, we've spoken a lot with

our clients about risk based allocation.

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Can you share a little bit more

information about what that is?

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Absolutely.

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I'm just going to take

you to another chart.

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And on the left hand side of this chart

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shows a client that had a million dollars

and lost 15%

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or had $850,000 versus a client that

lost 19% and their balance was $810,000.

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It's all about narrowing the bands.

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If you recall on that prior chart, the

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white boxes was where we wanted

to be a little more predictable.

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So if I'm at 850,000,

what is my journey back?

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I have to make 17.65% to get even.

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The person who has an 810,000

has to earn 23.46% back.

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That is a 33% differential in return.

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That is monumental.

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And so we at Braun Wealth Management

Group, we try to narrow the bands of

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reward so it's more easier on the

journey to attain your long term goals.

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All right, and then one last thing is

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are you able to share an example of a

model or Fiduciary model with everyone?

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Absolutely.

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This is one of our Fiduciary

models on this chart.

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If you notice from left to right, we can

mix these balances from a conservative

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income objective all the way to

aggressive growth objective.

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The one we're sharing with you

today is a moderate growth.

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So that strategic model would look like,

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for example, 41% in United States large

caps, 14% United States mid caps, 10%

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small caps in the United States, 8%

developed markets overseas, 9% emerging

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markets, and 17% short

term taxable fixed income.

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So during this journey, these strategic

models will be rebalanced ongoing to keep

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you on track, and that is the importance

of asset allocation and how we do it.

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It involves discipline,

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focus, and rebalancing all at the same

time, which makes it virtually impossible

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for anyone to do this on their own without

the platforms that we have in place.

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Thank you, Byron, for sharing about

asset allocation to us today.

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And we want to thank everyone one, for

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taking the time to watch and we

hope that you all have a great day.

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Thank you.