(Editors' Note: This article is meant as an introduction for Better Retirement Investing, a new Marketplace service by Reason Investments).
For many of us, our largest financial holdings consist of retirement savings in our 401(k) or other workplace retirement accounts. Unfortunately, most 401(k) plans have a limited menu of investment options that prevent us from taking advantage of great individual stock ideas within these accounts. And, if we manage a portfolio of individual securities in an IRA or taxable account, we still need a way to meld those holdings with the funds available to us in our 401(k) to come up with an overall portfolio that makes sense. Through our ArcPoint Advisor platform, we provide customized high-quality advice to individuals at a reasonable cost that addresses these and other issues that investors face. And, we are excited to launch Better Retirement Investing to bring our services to Seeking Alpha users.
What do you get with Better Retirement Investing?
A comprehensive risk tolerance evaluation
Subscribers to Better Retirement Investing will be emailed a customized link to our innovative risk tolerance assessment. In 2017, many of us still decide how to invest our life savings based on our age, an intuition of our desire to take risk, or some other rule of thumb. We can and need to do much better than that. The 2008 financial crisis made it clear that many of us were taking more risk than we were able to tolerate, and it ended up costing some of us big money. I began studying investor risk tolerance in the wake of the 2008 financial crisis and a large proprietary study of thousands of investors formed the knowledge base that has become ArcPoint Advisor.
ArcPoint Advisor’s risk tolerance questionnaire can identify your ideal level of portfolio risk in a matter of minutes. Unlike most risk assessments, we don’t determine your risk tolerance score only by your questionnaire responses but instead utilize the average responses of otherwise similar individuals (same education, occupation, etc.). We believe this "wisdom of the crowd" approach produces a superior assessment of an individual’s risk tolerance. This belief is supported by our proprietary research indicating that our crowd-sourced risk score does a better job of explaining an individual’s actual investment behavior.
Customized portfolio recommendations for your retirement accounts every month
Once your risk evaluation has been completed, all we need is a list of the investment options available in your workplace retirement plans. Our platform then systematically determines a portfolio appropriate for your risk tolerance. Each month, subscribers will get a customized email that details the recommended percentage allocation to each option in your retirement plans. Have investment holdings outside of your workplace plans? No problem. We’ll work with you to incorporate those holdings into our monthly recommendation so that your overall portfolio is optimized.
Already retired? If you have the bulk of your retirement assets in an IRA, subscribers will be able to take advantage of exclusive access to our model ETF portfolios for five different levels of risk tolerance. These model ETF portfolios are published monthly. Subscribers that only have IRAs will get a monthly email recommending the latest model portfolio appropriate for their risk tolerance.
Many portfolio optimizers used by robo-advisory platforms and others are plagued by "garbage in, garbage out" - stale or faulty assumptions ensure that recommendations are anything but optimal. We take a sophisticated approach to projections about the long-term expected return, risk and return correlation of each asset class. Our most recent market outlook is available here.
ArcPoint combines algorithms with human expertise to analyze the several thousand public companies held by the ETFs or mutual funds we recommend to determine the likely average earnings each company will achieve over an economic cycle (you can read some of our company specific research here and here). Companies are then grouped into twelve equity asset classes with distinct primary regions, market capitalizations, and degrees of sensitivity to economic cycles. This aggregation of hundreds of individual company forecasts unlocks the power to forecast real long-run returns for specific equity asset classes. We derive expected return projections for eight fixed income asset classes with similarly robust analytics. Risk and correlation projections for each asset class are calibrated with an understanding that return correlations spike during periods of market turmoil.
Early bird discount
Until September 30th, I will be offering a 20% off first-year discount rate for an annual subscription (regularly $599). I encourage you to take advantage of this limited-time offer.
Direct access to me when you need it
Subscribers to Better Retirement Investing are considered clients of my advisory firm, Reason Investments. And with that comes direct access to me via phone or email in addition to the Marketplace platform.
Thanks for your interest and I hope to have the opportunity to work with you soon.
Joe Arns, CFA
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.