The Model Portfolios Program, Exclusively for Our Clients

by John R. Stewart, Senior Financial Advisor/Portfolio Manager | June 15, 2022

A LOW COST, INNOVATIVE WAY TO MANAGE RISK AND REWARD IN A LOW INTEREST RATE WORLD

In light of recent Department of Labor (DOL) rules concerning fiduciary standards for retirement plans including IRAs many issues have been raised which focus on the transparency of commissions, fees and other costs advisors charge clients for their services.

Not paying attention to fees (also known as the expense ratio) could greatly impact your ability to afford a comfortable retirement.

Take for example the following illustration:

A 46 year old professional with $1,000,000 saved. Assuming a 6% gross annual return and a yearly contribution of $50,000:

We at Physicians Wealth Solutions have designed two model portfolios where both the internal fund fees and the advisory fee combined are approximately 1% or below per year.

Utilizing a diversified mix of low cost ETFs (Electronic-Traded Funds), we have designed two Model Portfolios to help investors meet their intermediate and long term goals.

We highly suggest that any investor have between 12 and 18 months of covering expenses in a readily available money market or savings account.

For the next 1-4 years out, we suggest our Reduced Risk ETF Model Portfolio.

The Reduced Risk ETF Model Portfolio has a historical 57% correlation to the S&P 500. The portfolio will be rebalanced on an annual basis.

For the longer term, for investors having more than a 5 year time horizon, we suggest our Risk-On Growth ETF Model Portfolio. The portfolio will be rebalanced on an annual basis.

If an investor chooses, the Growth ETF Model Portfolio can also utilize a market timing program which would move all investments to cash in periods of market downturns. While this program cannot guarantee any loss from the investments, it should minimize the loss from a prolonged market downturn such as experienced in 2000-2002, again in 2007-2008 and the Covid-19 pandemic in the winter and spring of 2020.

Frequently Asked Questions

What is an ETF?

An exchange-traded fund (ETF) is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds and trades close to its net asset value over the course of the trading day. Most ETFs track an index, such as a stock index or bond index.

Why are ETFs becoming so popular?

ETFs are attractive as investments because of their low cost, tax efficiency and stock-like features. ETFs offer both tax efficiency and lower transaction costs. More than two trillion dollars have been invested in ETFs since they were first introduced in the United States in 1993.  By the end of 2015, ETFs offered more than 1,800 different products, covering almost every conceivable market sector, niche and trading strategy.

While no one can predict the future and of course past performance are never indicative of future results, we at Physicians Wealth Solutions do know that being charged higher fees could make a difference to the bottom line over time. Any investment carries a certain amount of risk and loss of principal can occur with both of the Model Portfolios.  Please consult with your financial advisor, attorney and or tax consultant before making any investment decisions.

This article represents the opinion of John R. Stewart as of June 15, 2022. John R. Stewart is an investment advisor representative with Physicians Wealth Solutions, LLC, a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risks and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discusses herein.