Intuitive Wealth’s Investment Philosophy
Our Wealth Management Principles
Intuitive Wealth has a set of principles that guide how we advise clients and invest their savings.
Time in the market beats timing the market
Even investing experts find timing the market hard to do on a consistent basis. A more important consideration is to simply be invested for a long-term time horizon and across a broad array of investment assets.
We help clients achieve long term returns without needing to time the market and pick individual stocks.
The less you pay, the more you get
Simply put, the less you pay for you investment services, the more money is left for you to keep.
We use low cost index funds to reduce investment costs whilst maintaining a diverse market exposure.
Stick to a plan and be disciplined
It is our job to help our clients manage their emotions and keep them on the right course.At Intuitive Wealth we ensure that our clients investment strategy is appropriate for their risk capacity and goals. We then continuously educate to ensure that they do not make poor investment decisions such as over-trading, chasing returns or panicking when the market falls.
Rebalancing reduces risk
All asset and sectors of the market go through periods of strong performance followed by weak performance. These cycles are difficult to predict.
Rather than guessing when markets are cheap or expensive, we periodically rebalance portfolios to reduce risk after periods of strong performance.
Avoid market hype
There are three considerations to make when investing; return, risk and cost. Everything else is just marketing. The investment industry goes to great lengths to add extra complexity and choice in order to justify higher fees.
We help clients distinguish between sensible investments and marketing hype.
Alignment of adviser and client
Intuitive Wealth are holistic financial & investment advisers. We are licensed independently to any bank or financial institution meaning that we have no obligation to recommend internal funds. Our only objective is to recommend the most suitable product to our clients.
Intuitive Wealth is paid only by the client and does not receive additional commissions for the investment products we recommend. As such, our clients can be confident that our only objective is to grow the wealth long term.
Our Investment Philosophy
Asset allocation drives the majority of portfolio returns and risk, so it is of paramount importance.
Low cost index funds provide superior after-fee returns to actively managed funds engaged in stock picking or market timing.
Markets move in cycles so after a period of strong returns in one asset it is prudent to rebalance into others to lock in profits and reduce risk.
When it comes to investing the only factors are return, cost and risk. Everything else is just marketing.
How Intuitive Wealth invest?
At Intuitive Wealth we strongly believe that the most important decision is choosing how much to invest in each asset class, rather than trying to pick winners within each asset. Diversification willows your portfolio to reduce the amount of risk you need to take to achieve higher returns, and ultimately reduces the volatility of your returns.
We use use Modern Portfolio Theory to construct our clients portfolios, a framework that has been recognised by a Nobel Prize in Economics in 1990.
Can active fund managers beat the market?
It is now difficult to be a ‘stock picker’ because there is an over saturation of smart investment managers trying to beat each other.
Today 90% of shock market trading is done by professionals. In most cases the buying and selling of shares are done between two investment managers. This is ultimately a ‘zero sum game’ whereby there is winner for every loser in a trade. On average, fund managers earn the benchmark market return less their fees.
Today their are more than 1 million professionals actively managing money. New information gets reflected almost instantaneously into stock prices. The market is efficient and has been the case since the 1990’s. This is why almost all professionals have had worse performance than the market index since then.
This doesn’t mean some professionals don’t have a good run with performance. However, history shows that good periods of performance are often followed by a period of poor relative performance. Fund managers struggle to stay consistently at the top for an extended period of time and investment styles come in and out of favor.
As such, we do not see the value in using fund managers as their performance (after fees) does not out-perform the market index - Their fees are not justified!
How is Intuitive Wealth different to other advisers?
Disciplined Investing
We are less risky than the average active fund manager or adviser because we do not try and outperform the market. Instead, our investment strategies track a broad range of diversified assets that generate long term returns.
Our clients have their investments periodically rebalanced to reduce the risk of having an over allocation of a particular asset class. We help clients understand their own investing behavioral biases and avoid the common pitfalls of over-trading, paying higher fees, chasing returns, or panicking when market falls.
Lower Costs
The funds management industry as a whole has achieved average performance, so paying them large fees destroys your long term earnings potential. Paying 2.5% in costs each year means that 75% of your potential returns are being eroded away over your lifetime.
The investment management industry lives off the the brokerage costs that are earned when you buy and sell out of stocks. Active fund managers and advisers want you to constantly be turning over your portfolio because it is how they can justify their large management fees.
But every cent you pay comes out of the returns you could have earned for yourself.
We believe that investing in low cost index funds is a more prudent strategy than stock picking. The reason why is that we believe our clients should keep their management costs as low as possible so that they have a higher likelihood of achieving long term investment success. The funds we recommend charge around 0.25% per year which is 0.75% less than most funds managers. This means that more money can be kept in our clients pockets.
No Conflicts of Interest
Intuitive Wealth has an independent relationship with any of the funds we recommend. We do not earn fees from these funds, so you can be sure that our recommendations are in your best interest. Most financial advisers charge a percentage based fee for managing your investments. However, we believe that it is more appropriate to charge a fixed fee based on the time and complexity of the work that we do. For those with larger investment balances, this will mean considerable savings in investment management fees each year.