HawsGoodwin Investment Process
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HawsGoodwin Investment Process

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HawsGoodwin Investment Process HawsGoodwin Investment Process Presentation Transcript

  • This and/or the accompanying information was prepared by or obtained from sources that Wachovia Securities Financial Network believes to be reliable, but Wachovia Securities Financial Network does not guarantee its accuracy or completeness. Any market prices are only indications of market values and are subject to change. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request. HawsGoodwin Investment Management and Wachovia Securities are not tax or legal advisors. Investments in securities and insurance products are: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE Investment products and services are offered through Wachovia Securities Financial Network (WSFN). Wachovia Securities is the trade name used by two separate, registered broker-dealers and nonbank affiliates of Wachovia Corporation providing certain retail securities brokerage services: Wachovia Securities, LLC, member NYSE/SIPC, and Wachovia Securities Financial Network, LLC, member NASD/SIPC. HawsGoodwin Investment Management, LLC is a separate entity from WSFN. CAR #1008-101386
  • Our Firm
    • Our Vision
      • To provide families and individuals with the comfort of a professional, personalized approach to managing their wealth which will give them the highest probability of success of meeting their goals and aspirations.
    • Why should you consider professional wealth management?
      • In any wealth management plan, there are emotional as well as financial aspects to the decisions you must make. With that in mind, our disciplined process is designed to help our clients:
        • Preserve their lifestyles even in challenging market environments
        • Avoid unnecessary taxes, risks, losses, common mistakes, and themselves
  • HawsGoodwin Investment Management You We will work with your other professional advisors, including: 1 Attorneys Responsible for preparing wills, powers of attorney and trust documents, and providing estate planning and tax advice Accountants Responsible for preparing individual and corporate annual tax returns, as well as providing audit specialization and tax planning advice Business insurance professionals Responsible for assisting business owners with insuring their largest single asset, as well as acquiring life, health and disability coverage We will form a strategic relationship with your other advisors Our Team
  • C. Arthur Haws, CFP ® Managing Partner
    • Certified Financial Planner™ professional
    • More than 17 years of experience providing financial advice and wealth management services to individuals and institutions
    • Holds a M.B.A in Finance from Vanderbilt University’s Owen Graduate School of Management and a B.S. in Business Administration from Murray State University
    • Serves as Board Vice President for Historic Carnton Plantation, and board member of the Cool Springs YMCA
    • Resides in Franklin, TN with his wife, Susan, and three children; Chase, McLean, and Hendley
  • W. Cam Goodwin, CFP ® Managing Partner
    • Certified Financial Planner™ professional
    • Has had many equity strategy reports and commentary published by The Motley Fool , an Alexandria, VA based financial media company
    • Holds a B.S. in Finance from The University of Mississippi in Oxford, MS and a Certificate in Financial Planning from Belmont University in Nashville, TN
    • Serves as a board member for Historic Carnton Plantation, a member of the Franklin Rotary Club at Breakfast, and an active member of Harpeth Community Church
    • Resides in Franklin, TN with his wife, Beth, and daughter, Gracey
  • Our Process D esigned to help families protect, maintain, and possibly enhance their lifestyle Wealth Management: Ongoing Process and Discipline Wealth Planning Estate Planning Investment Planning
  • Wealth Planning
    • We consider:
      • Short and long-term goals
      • Current assets and liabilities
      • Cash flow situation
      • Risk exposure
    • Then perform:
      • Analysis to determine your likelihood of success.
    • In order to:
      • Recommend strategies to help achieve your goals.
  • Cash Flow Matters How important is spending and cash flow?
    • When it comes to your long-term plan, spending can make a big difference
    Year Portfolio Values (Spending 5%) Path 2 $1.8 Path 1 $1.6 Path 3 $1.2 Differential 50% The solutions discussed may not be suitable for your personal situation, even if it is similar to the example presented. Investors should make their own decisions based on their specific investment objectives and financial circumstances. It should not be assumed that the recommendations made in this situation achieved any goals mentioned. This example is hypothetical and does not represent any specific investments or strategies. 1 2 3 4 5 6 7 8 Compound Annual Return Return Path 1 10% 10% 10% 10% 10% 10% 10% 10% 10% Return Path 2 38% 23% 33% 29% 21% -9% -12% -22% 10% Return Path 3 -22% -12% -9% 21% 29% 33% 23% 38% 10%
  • Estate Planning
    • Why consider estate planning?
      • Helps preserve the assets you've spent a lifetime building
      • Helps protect your spouse, children or other heirs
      • Helps ensure your assets are distributed how and when you want them to be
      • Can help reduce the amount of estate taxes that will be due
    • Our process
      • Identify your current needs and objectives
      • Examine current circumstances and family issues
      • Evaluate existing estate plan
      • Work with an estate planning attorney to:
        • Make sure proper documents are in place
        • Update existing plan, if necessary
        • HawsGoodwin Investment Management and Wachovia Securities Financial Network are not a legal
        • or tax advisor. However, we will be glad to work with you, your accountant, tax advisor and or lawyer
        • to help you meet your financial goals.
  • Investment Planning Individual Investors Have On Average Underperformed Lehman Aggregate Bond Index Average Bond Fund Investor Average Stock Fund Investor Inflation S&P 500 Annualized Returns 1986–2005 © 2006 Dalbar, Inc. This information is for illustrative purposes and seeks to demonstrate the virtues of a buy and hold strategy rather than trying to time the market.
    • The Indices are presented to provide you with an understanding of their historic long-term performance and are not presented to illustrate the performance of any security. Investors cannot directly purchase any index.
    • The S&P 500 (a registered trademark of the McGraw Hill Companies) is an unmanaged, index of common stock.
    • The Lehman Brothers Aggregate Index is composed of securities from Government/Credit Index, Mortgage-Backed Securities Index, and the Asset-Backed Securities Index.
  • What Is the Most Detrimental Mistake Investors Make? Asset Allocation does not eliminate the risk of fluctuating prices and uncertain returns. Source: AllianceBernstein Investments. 2005 Survey of Financial Advisors on Asset Allocation Not paying enough attention to asset allocation 33% Trying to time the market 31% Having too much money in one investment 16% Buying overvalued investments 8% Other 1% Holding on to investments too long 11%
  • Investment Discipline Understanding How Human Emotions are Usually Wrong Source: Davis Advisors “The Successful Investor”
  • Bad Investment Decisions Can Result from Loss Aversion Loss Gain Pleasure Pain Small Pleasure Big Pain Source: Amos Tversky and Daniel Kahneman, 1992 “Advances in Prospect Theory: Cumulative Representation of Uncertainty” Journal of Risk and Uncertainty
  • Data Frequency Can Distort Our Perceptions Source: Standard & Poor’s 2006 S&P 500 Index Returns Full Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
  • Loss Aversion Can Distort Our Asset Allocations Annual Returns Monthly Returns Frequency of Negative Reports 39% 14% Equity Fund Allocation 41% 70% Investors Receiving Source: Thaler, Tversky, Kahneman and Schwartz, 1997 “The Effect of Myopia and Loss Aversion on Risk-Taking: An Experimental Test” Quarterly Journal of Economics Asset Allocation can not eliminate the risk of fluctuating prices and uncertain returns .
  • Overcoming Loss Aversion
    • Know the Enemy
    • We fear the pain of a loss more than we feel attracted to possible gain, generally causing us to overreact and make impulsive decisions
    • Solution
    • Understand that loss aversion is a natural emotion
    • Define your goals and objectives and a long-term strategy to help reach them
    • Implement a rules-based approach to the “buy low, sell high” axiom that can keep you on track
  • The HawsGoodwin Group Strategy
    • Step 1: Diversify Across Asset Classes
    • Step 2: Diversify Within Asset Classes
    • Step 3: Globalize the Portfolio
    • Step 4: Rebalance
    • Step 5: Maximize After-Tax Returns
  • Step 1: Diversify Across Asset Classes We Believe Asset Allocation is More Important Than Security Selection
    • Asset Allocation is the mix between cash, bonds, stocks, and alternative investments of your investment portfolio.
    • We believe it is the primary factor determining portfolio performance and volatility; it also keeps you invested during tougher markets which can potentially increases your returns over time.
    (Source: Brinson, Singer, Beebouwer/1990-Financial Analysis Journal May/June 1991) Asset allocation can not eliminate the risk of fluctuating prices and uncertain returns.
  • What is Correlation? Correlation with the stock market is a measure of the standard deviation of various benchmarks to the Russell 3000, a common measure of the performance of the broad US stock market. Source: Russell Investment Group, Lehman Brothers, Merrill Lynch, MSCI, NAREIT and AllianceBernstein US Growth International US Value Short-Term Bonds REITs No Correlation 0 High Correlation 1.0 1984–2006 US Small-Cap Intermediate-Term Bonds High Yield Cash
  • The Potential Benefit of Low Correlation US Stocks (29.2)% (42.7) (14.2) (17.2) (29.6) (14.7) (13.4) (40.9) (25.2)% 2.2% 4.6 1.5 21.7 2.3 5.2 4.7 36.5 9.8% Dec 68–Jun 70 Jan 73–Sep 74 Jan 77–Feb 78 Dec 80–Jul 82 Sep 87–Nov 87 Jun 90–Oct 90 May 98–Aug 98 Apr 00–Mar 03 Average Source: Center for Research in Securities Prices and Standard & Poor’s US Bonds
  • The Power of Diversification Investment A 50% (26)% 12% Investment B (10) 30 10 Average Year 1 Year 2 Annual Return The solutions discussed may not be suitable for your personal situation, even if it is similar to the example presented, Investors should make their own decisions based on their specific investment objectives and financial circumstances. It should not be assumed that the recommendations made in this situation achieved any of the goals mentioned. This example is hypothetical and does not represent any specific, investments or strategies.
  • The Power of Diversification A B A and B 12% 10 11 Average Annual Return (26)% 30 2 50% (10) 20 Year 2 Year 1 Source: Bernstein The solutions discussed may not be suitable for your personal situation, even if it is similar to the example presented, Investors should make their own decisions based on their specific investment objectives and financial circumstances. It should not be assumed that the recommendations made in this situation achieved any of the goals mentioned. This example is hypothetical and does not represent any specific, investments or strategies. $100 Year 1 Year 2 $111 A $117 B $122 A and B
  • Step 2: Diversify Within Asset Classes Value Opportunities Long-Term Earnings Power Growth Investing Value Investing Growth Opportunities
    • Goal: Find underestimated growth potential
    • Goal: Buy bargains
  • Growth and Value Trade Leadership Historically Source: Russell Investment Group and Alliance Bernstein Value Stocks Growth Stocks Annualized Returns 80 81–88 89–91 92–93 94–99 00–06
  • Trying to “Time” the Style Cycle Is Futile Source: Fama/French and AllianceBernstein Hypothetical Average Annual Return 1970–2006
  • Step 3: Globalize the Portfolio
    • HSBC (UK)
    • Mitsubishi (Japan)
    • UBS (Switzerland)
    • Toyota (Japan)
    • DaimlerChrysler (Germany)
    • Honda (Japan)
    • Sony (Japan)
    • Matsushita (Japan)
    • Electrolux (Sweden)
    Industry Share by Market Value As of December 31, 2005 Source: MSCI 63% 37% Banking 88% 12% Autos 80% 20% Household Durables United States Non-US
  • Diversifying with International Stocks Has the Potential to Help Lower Risk 1970−2006 % in International Stocks Source: MSCI, Standard & Poor’s and AllianceBernstein Volatility (%) Investing in foreign securities presents certain risks not associated with domestic investments such as currency fluctuation, political and economic instability, and different accounting standards. This may result in greater share price volatility. Lower Volatility
  • Step 4: Rebalance Buy Underperform Strategic target Outperform Sell As an asset class/style outperforms, trim investment As an asset class/style underperforms, add to investment Our Rebalancing Discipline Helps to Buy Low, Sell High Upper trigger Lower trigger
  • Step 5: Maximize After-Tax Returns
    • Basic
    • Consider owning Municipal Bonds, generally not taxable
    • Reconsider holding REITs, the income is generally tax inefficient
    • Keep turnover low
    • Avoid short-term gains
    • Harvest losses to offset gains on stocks and bonds
    • Advanced
    • Track holdings by tax lot
    • Sell individual tax lots with the least tax cost
    • Avoid wash sales
    Tax-Management Techniques HawsGoodwin Investment Management does not provide tax advice. In considering this message, you should discuss your individual circumstances with your tax advisor before making any decisions.
  • The Potential Benefit of Tax Management Potential Added Return from Tax Management Avoiding short-term gains Delaying long-term gains +0.77% +0.55% +0.22% Total potential added return from tax-savvy investing This illustration is an example of the potential added return from tax management, not actual investment results. Source: AllianceBernstein
  • It’s the Overall Results of a Portfolio that Matter International Stocks Bonds US Style Blend Balanced Wealth Asset Allocation The above is a hypothetical illustration only and is not intended to represent any particular investment. The asset allocation that is right for each individual will vary. Geographic Mix Multiple Levels of Diversification 30% Int'l 70% US 50% Growth 50% Value 50% Growth 50% Value
  • What can you expect from us?
    • Always fully disclose our fees
    • Work with your other experts to insure a sound financial plan
    • Coordinate and organize financial documents
    • Service
      • Portfolio monitoring, rebalancing, and performance reporting
        • Monthly in-house reviews
        • Quarterly client reviews
          • At least one face-to-face
    • We will always perform to the best of our abilities such that each of our clients would be proud to recommend us to their friends and family.