Financial Planning
Our first step in working with you is to develop a financial plan based on your financial and lifestyle goals, financial resources, earnings potential and your own level of risk tolerance. In the planning process we address questions such as:

	When do you want to retire, or perhaps make a change of careers or level of commitment?
	What is your baseline level of spending and saving now, and how much flexibility might you have to consider changes?
	How much annual income will you need to maintain the lifestyle you envision in your next stage(s) of life?
	What special "one-time" large expenditures would you like to plan for, such as college educations, house additions, second or new homes, weddings, travel and so forth?
	How do the key sources of investment uncertainty -stock market returns and volatility, interest rates, inflation, and taxation - affect your financial plan?
	What is your level of risk tolerance? And what does that really mean anyway?
	How aggressive can you afford to be? How large are the risks of equity markets? What does "volatility" have to do with risk?

Once we have defined your financial goals and desired lifestyle, the central financial question is, are you on a path that can succeed in fulfilling these desires? The answer will typically not be a simple "yes" or "no". Uncertainty is a fact of life, no matter how well designed your financial plan, and there are seldom any sure things. But we can do is define your "probability of success" as the probability that you will achieve your goals without running out of money before you die.

A key feature of our financial planning approach is that we can compute an actual numerical estimate of your probability of success. This will give you an intuitive understandable way of assessing whether you are on a realistic path to achieving your goals and desired lifestyle.

But the process involves more than computing a single answer. We will go on to show you how changing certain key features of your plan might affect your probability of success. Some of the factors that we commonly consider include the following:

	Your portfolio's asset allocation, especially the percentage in equities versus fixed income
	Your level of consumption
	Your lifestyle plans, such as year of retirement or change of career

The key result of this process is a plan for how much you will earn and save over the coming years, when you will make certain major expenditures, when you will retire (or change course), and what level of consumption you can maintain after that. In addition, we can estimate the level of life insurance you need (if any), and the wealth that may be ultimately available for your heirs or for charities.

At the top level:

Equity vs. fixed income vs. real estate vs. (possibly) alternative investments

Within equities:

	Domestic vs. international equities (including Europe, the Pacific Rim and emerging markets)
	Large cap, small cap, micro cap equities
	Value measures relative to growth characteristics
	Sector weightings (e.g., technology, financials, etc)
	Active vs. passive investment approaches
	Classic fundamental vs. quantitative vs. (possibly) other equity selection approaches

Within fixed income:

	Durations (short, intermediate, long)
	Quality ratings (investment grade,high yield)
	Issuing entity (U.S. Government, state/local governments, agencies (GNMA, FNMA), corporate bonds)
	Countries of origin (domestic, foreign)
	Inflation protection provisions (traditional nominal bonds, TIPS)

Within real estate (typically using REIT mutual funds)

	Commercial sectors (retail, offices, industrial, residential, hotels, health care, timber, etc.)
	Size and quality of REIT's (market cap and yield)

While people commonly hold too many mutual funds, they are generally under-diversified with respect to the asset classes represented in their portfolios. At MAM, a key feature is our inclusion of a broad range of asset classes in our clients' portfolios, including asset classes that are more often than not ignored or greatly under-represented by the investing public, such as domestic micro-cap stocks, international small caps, REIT's and inflation protected bonds.

Our approach to picking mutual funds is based on the following characteristics:

	Low operating expenses and turnover; no sales loads
	Investment approach consistent with our own (e.g., buy and hold, fundamental valuation methods, no market timing, etc.)
	Competent managers with well articulated and consistent styles
	Risk measures
	Long term performance relative to others in the same asset classes

We do not believe in "chasing performance", which means we do not select mutual funds because they performed well in the most recent period. Research shows convincingly that future performance of mutual funds has almost zero correlation with past performance. (The only exception is for the really bad performers. Apparently it is possible to consistently under-perform.)

We do believe strongly in screening for cost. Mutual fund operating costs vary dramatically, and these operating costs matter a great deal more than most people realize. There is no correlation between fund operating costs and performance, so we don't want to over-pay for active management.

We may begin by identifying a slate of investment choices we would make if we were devising your portfolio from scratch. But before taking any actions, we must carefully analyze the asset allocation inherent in your existing investment portfolio, as well as the tax ramifications for making any changes. If there are no tax ramifications (such as in a qualified plan), we can simply implement our ideal portfolio. But when taxes are involved, we have to carefully analyze the relative benefits of moving to a preferred set of investments choices versus continuing to defer taxes. Deferring taxes is not just delaying the inevitable; it entails a real dead weight cost. The result of our analysis is a phased implementation plan for moving towards the desired portfolio in a way that balances tax acceleration and investment benefits.

Ongoing Investment Management and Advice
Once an investment plan is has been placed in action, we continue to provide the following services on an ongoing basis:

	Continual monitoring of your portfolio. With our busy lives, the great majority of people who attempt to manage their own investment portfolio end up doing so in a somewhat hit and miss fashion. They look at their investments sporadically, when they happen to get to it. When you select MAM to be your financial advisor it becomes our responsibility to monitor your portfolio and the market environment on a continual and systematic basis, so you don't have to worry about it.
	Consolidated reporting. Once you sign up with MAM, you'll have everything in your financial life pulled together in one place, managed under a single, unified portfolio management system. Our reports will enable you to evaluate your overall position from a comprehensive perspective, as well as showing the specific elements. You will get quarterly reports from us, but you can also view your accounts directly on-line at your custodian any time you like.
	Performance measurement. We'll help you understand how you're doing, compared both to market benchmarks, and, more importantly, towards meeting your own goals.
	Disciplined rebalancing. Portfolios need to be rebalanced from time to time for two reasons: (1) Portfolios naturally drift out of balance relative to their asset allocation targets as different asset classes and investments experience differential performance through time. (2) We modify your asset allocation targets in modest increments from time to time as our assessment of asset class valuations and prospects change. We will automatically re-balance your portfolio to your own asset allocation targets on a periodic basis, generally two to three times per year. It is worth noting that rebalancing to correct "drift" (reason 1 above) is an intrinsically contrarian discipline. It implies buying more of the asset classes that have recently performed poorest, while selling those that have advanced the most. This is one of the best disciplines we know of for practicing the age-old goal of "buying low and selling high."
	Reviews of your financial plans and risk tolerance. We will periodically review your financial plan with you, probably on an annual basis. We expect changes will be incremental in nature many times, but life situations do change - marriages, divorces, births, deaths, illnesses, job and career changes, IPO's, inheritances, and simple changes of heart in financial goals and plans - and we need to adjust your financial plans and investment portfolios to incorporate any such changes. This is also the time for us to review our assessment of your risk tolerance, since this can be a valid basis for altering your top-level asset allocation. It is important that we distinguish this from fear or exuberance about current market behavior, since changes emanating from such emotions are really forms of "market timing", which is a practice we eschew at MAM.
	On-call financial advice. We are always here to field any kind of financial questions you may have. Even if your question is not our area of specific expertise, we will help you get the answers you need, often by consulting with our associates in the relevant fields, or if appropriate, by providing you with direct access to them. Examples of such associates include estate planning attorneys, CPA's, insurance specialists, mortgage brokers and retirement plan specialists.
	Someone you can trust. In the final analysis, trust is the most important aspect of a client-financial advisor relationship. This is a key question to ask references about a potential financial advisor. With MAM, you will have someone you can trust to help you manage and watch over your financial affairs on a continuing basis.