Achieving Financial Freedom in Retirement
Letter from JordanDechtman
Many people today are facing difficult choices in achieving their financial goals and, as well
they should, are asking serious questions. Our goal with Taking a Comprehensive Approach
to Your Financial Life is to help you see through the noise of the marketplace in order to
systematically make smart decisions about yourmoney.
Because educated investors are the most successful investors, we are presenting Taking a
Comprehensive Approach to Your Financial Life to show you a Nobel Prize–winning approach
crafted to optimize your investment portfolio over time. This paper has been designed not
only to support you in your efforts to preserve what you already have, but to also efficiently
capture the market’s returns for your investments.
In addition, because we recognize that reaching your financial goals requires more than just
good investment management, we have also described an approach—comprehensive wealth
management—that systematically addresses your entire range of financial issues.
We believe in empowering people to make the best decisions for themselves or, if they wish,
to astutely choose a financial advisor who can implement sound wealth management
principles. And we believe in sharing our own financial knowledge with everyone who wants
to make wise decisions about his or her money.
DechtmanWealth is pleased to present Taking a Comprehensive Approach to Your Financial
Life to our clients and prospective clients. We sincerely hope that it will provide you with a
framework for an intelligent approach to making financial decisions that will help you to
achieve all your most important dreams.
Sincerely,
Jordan Dechtman
Founder & CEO
DechtmanWealth
6025 S. Quebec St., Suite 170 , Centennial, CO 80111 ● 303-741-9772 ● www.DechtmanWealth.com
Dechtman Wealth Securities offered through Securities America, Inc. Member FINRA/SIPC. Jordan Dechtman, Registered Representative Advisory services
offered through Securities America Advisors, Inc., an SEC Registered Investment Advisory Firm. Jordan Dechtman Registered Investment Advisor Representative.
Dechtman Wealth and Securities America companies are unaffiliated. Securities America and its representatives do not provide tax or legaladvice. All
investments involve the risk of potential investment losses and no strategy can assure a profit. Investments in model strategies may expose the investor to risks
inherent within the model and the specific risks of the underlying investment directly proportionate to their allocation. All investments involve the risk of
potential investment losses. The opinions and forecasts expressed are those of the author, and may not actually come to pass. This information is subject to
change at any time, based on market and other conditions and should not be construed as a recommendation of any specific security or investment plan. Past
performance does not guarantee future results.
TAKING A COMPREHENSIVE APPROACH TO YOUR FINANCIAL LIFE
Taking a Comprehensive Approach to
Your Financial Life
M
oney means different things to different people.
Each of us has different dreams. You may want to achieve
financial freedom so that you never have to work again—even if you plan
on working the rest of your life. You may want to make a top-level college
education possible for your children or grand-
them with more than just investments. They
children. You might want to provide the seed
want real wealth management—a complete
capital that will give your children or grandchil-
approach to addressing their entire financial
dren a great start in life, whether that’s with a
lives.
home or a business. You may dream of a vaca-
As you’ve probably noticed, many financial
tion home on the beach or in the mountains. Or
firms these days say that they offer wealth man-
you may have achieved tremendous success
agement. The trouble is that many of these firms
throughout your career and want to leave
just provide investment management and offer
behind an enduring legacy that will enable your
a couple of extra services—such as college edu-
favorite charity to continue its work.
cation planning and estate planning—and call
Whatever your dreams are, you need a frame-
that wealth management. So the challenge for
work for making wise decisions about your
anyone who wants help addressing all his or her
money that will help enable you to achieve all
financial needs is finding a firm that provides
that is important to you. Chances are good that
true wealth management.
you have a wide range of financial goals, as well
We define wealth management as a formula:
as diverse financial challenges.
Common sense tells us that such a broad
WM = IC + AP + RM
range of issues requires a broad comprehensive
outlook. It’s for this reason that most affluent
Investment consulting (IC) is the astute man-
clients want their financial advisors to help
agement of investments over time to help
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TAKING A COMPREHENSIVE APPROACH TO YOUR FINANCIAL LIFE
achieve financial goals. It requires advisors to
To address their clients’ needs effectively,
deeply understand their clients’ most important
they must foster solid, trusted relationships
challenges and then to design an investment
with them. Second, wealth managers must man-
plan that takes their clients’ time horizons and
age a network of financial professionals—
tolerance for risk into account and that describes
experts they can call in to address specific client
an approach that will help maximize clients’
needs. Finally, wealth managers must be able to
probability of achieving their goals. It also
work effectively with their clients’ other profes-
requires advisors to monitor both their clients’
sional advisors, such as their attorneys and
portfolios and their financial lives over time so
accountants.
that they can make adjustments to the invest-
Our focus in this resource guide will be on
ment plan as needed.
the first element of wealth management—
Advanced planning (AP) goes beyond invest-
investment consulting. But bear in mind that
ments to look at all the other aspects that are
managing your investments is just one part of a
important to your financial life. We break it
comprehensive approach to your financial life.
down into four parts: wealth enhancement,
At the end of this guide, we’ll describe what you
wealth transfer, wealth protection and charita-
should expect from a true wealth manager so
ble giving. In our experience, very few financial
that you can make an informed decision when
advisors offer these services.
choosing which financial professional to work
Relationship management (RM) is the final
with.
element. True wealth managers are focused on
Let’s turn now to our discussion of the con-
building relationships within three groups.
cepts that can make you a more successful
The first and most obvious group is their clients.
investor.
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TAKING A COMPREHENSIVE APPROACH TO YOUR FINANCIAL LIFE
Rising Above the Noise
S
ome i nv e stme nt pr o f e s s iona l s m ay s e e m l i ke t h e y a re
speaking a different language. As experts in their field, its
easy to assume investors understand every term and concept, but
frequently the jargon becomes confusing and even intimidating.
But investing is actually not that complicated.
Unfortunately, most of the public is in this
It can be broken down into two major beliefs:
quadrant because the media play into this think-
I You believe in the ability to make superior
ing as they try to sell newspapers, magazines
security selections, or you don’t.
and television shows. For the media, it’s all about
I You believe in the ability to time markets, or
you don’t.
getting you to return to them time and time
again.
Let’s explore which investors have which
Quadrant two is the conventional wisdom
belief systems and where you should be with
quadrant. It includes most of the financial serv-
your own beliefs.
ices industry. Most investment professionals
Exhibit 1 classifies people according to how
have the experience to know they can’t predict
they make investing decisions. Quadrant one is
broad market swings with any degree of accu-
the noise quadrant. It’s composed of investors
racy. They know that making incorrect predic-
who believe in both market timing and superior
tions usually means losing clients. However,
investment selection. They think that they (or
they believe there are thousands of market ana-
their favorite financial guru) can consistently
lysts and portfolio managers with MBAs and
uncover mispriced investments that will deliver
high-tech information systems who can find
market-beating returns. In addition, they believe
undervalued securities and add value for their
it’s possible to identify the mispricing of entire
clients. Of course, it’s the American dream to
market segments and predict when they will
believe that if you’re bright enough and work
turn up or down. The reality is that the vast
hard enough, you will be successful in a com-
majority of these methods fail to even match
petitive environment.
the market, let alone beat it.
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TAKING A COMPREHENSIVE APPROACH TO YOUR FINANCIAL LIFE
EXHIBIT 1
THE INVESTMENT DECISION MATRIX
Market Timing
Yes
No
Noise Quadrant
1
Conventional Wisdom Quadrant
2
Most individual investors
Financial journalists
Financial planners
Stock brokers
Most mutual funds
Tactical Allocation Quadrant
3
Information Quadrant
4
Pure market timers
Asset allocation funds
Academics
Many institutional investors
Yes
Security
Selection
No
Source: CEG Worldwide.
As un-American as it seems, in an efficient
Quadrant four is the information quadrant.
capital market this methodology adds no value,
This is where most of the academic community
on average. While there are debates about the
resides, along with many institutional investors.
efficiency of markets, most economists believe
Investors in this quadrant dispassionately
that, fundamentally, capital markets work.
research what works and then follow a rational
Quadrant three is the tactical asset allocation
course of action based on empirical evidence.
quadrant. Investors in this quadrant somehow
Academic studies indicate that investments in
believe that, even though individual securities
the other three quadrants, on average, do no bet-
are priced efficiently, they (and only they) can
ter than the market after fees, transactions costs
see broad mispricing in entire market sectors.
and taxes. Because of their lower costs, passive
They think they can add value by buying when a
investments—those in quadrant four—have
market is undervalued, waiting until other
higher returns on average than the other types
investors finally recognize their mistake and
of investments.1
selling when the market is fairly valued once
Our goal is to help investors make smart deci-
again. We believe that it’s inconsistent to think
sions about their money. To accomplish this, we
that individual securities are priced fairly but
help investors move from the noise quadrant
that the overall market, which is an aggregate of
to the information quadrant. We believe this is
the fairly priced individual securities, is not. No
where you should be to maximize the probabil-
prudent investors are found in this quadrant.
ity of achieving all your financial goals.
1 Michael C. Jensen, “The Performance of Mutual Funds in the Period 1945–1964,” Journal of Finance, May 1968.
Mark M. Carhart, Jennifer N. Carpenter, Anthony W. Lynch and David K. Musto, “Mutual Fund Survivorship,” unpublished
manuscript, September 12, 2000.
Christopher R. Blake, Edwin J. Elton and Martin J. Gruber, “The Performance of Bond Mutual Funds,” The Journal of Business,
1993: 66, 371–403.
Edwin J. Elton, Martin J. Gruber, Sanjiv Das and Matt Hlavka, “Efficiency with Costly Information: A
Reinterpretation of Evidence from Managed Portfolios,” The Review of Financial Studies, 1993: 6, 1–22.
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Q.
If you are retired or soon to be
retired…Doesn’t it make sense to spend a
few minutes NOW to help ensure your
retirement is everything you envision it to be
and more?
If it does. . .
Call 303-741-9772 today
and request your COMPLIMENTARY
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