Discretionary Asset Management
Most private clients ask us to manage their portfolios on a discretionary basis. In such a capacity, NWCM makes all investment decisions without the client's prior approval of each specific transaction; however, such decisions are made within the constraints of authority set forth in a Statement of Investment Policy. Reports from both the custodian and NWCM detail transactions, allowing the client to review these decisions—with the benefit of 20/20 hindsight—rather than be forced to make these investment decisions or approve them in advance.
When managing a portfolio on a discretionary basis, we are acting in a fiduciary capacity, meaning we are acknowledging in writing that all such decisions must be in the client's best interests. Our fiduciary obligations and our commitment to integrity assure our clients we are acting without conflict of interest.
Our firm utilizes a formal committee format for its asset management practice. The NWCM Investment Committee is charged with research on investment managers and the financial markets. The firm's strategic and tactical portfolio management is a result of the collective input and talent of the Investment Committee members. Our clients benefit from the collective experience and research of this Committee, knowing that each investment option utilized in our clients' portfolios has been reviewed and screened.
Statement of Investment Policy
Custom investment strategies are developed for each client. We design and customize a Statement of Investment Policy (SIP) that outlines strategic goals, risk tolerance, and investment mandate.
The SIP drives NWCM's research efforts of the investment options for the portfolio by dictating minimum performance criteria and establishing measurable benchmarks that each investment must reflect for it to be considered. These criteria and benchmarks (both quantitative and qualitative) comprise the filters NWCM employs to narrow the universe of potential investment options.
Few private clients have SIPs. The practice of NWCM is to develop such for each client and seek agreement as to its content and scope. An SIP allows the client to effectively monitor the success of the investment advice received.
A SIP answers the following questions, among others. What amount of return is the portfolio expected to yield? Over what period of time? How much investment risk will be tolerated? Are some types of investments not acceptable for purchase? Are there minimum and maximum exposures to various assets classes? What are the benchmarks against which investment performance will be measured?