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Connecting the Dots on Your Investment Plan

Donald Calcagni, MBA, MST, CFP®, AIF®

Chief Investment Officer

Summary

Mercer Advisors CIO Donald Calcagni discusses how investment management bridges today’s reality with tomorrow’s goals.

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Investment planning as a bridge between present and future

Investment planning is the bridge to our future; it’s the critically important work of connecting the dots from where we are today to where we want to go. One might consider the balance sheet as one side of the riverbank—where we are today—and our future goals as the other side of the river. Investment planning is the process of building the bridge and connecting the two sides of the river by identifying and implementing the asset mix required to help confidently achieve our goals. While traditional investment portfolios consisting of stocks and bonds are a critical part of that mix, so too are private equity, business interests, private real estate, life insurance, and less obvious assets, such as human capital, physical health, and one’s network of family support. Proper investment planning identifies how our portfolios should look in terms of asset allocation, manager selection, and asset location. But it transcends these considerations to also take into account how our portfolios should interact with our broader balance sheets, our tax and estate planning, and even how we go about making both financial and non-financial decisions in our everyday lives.

 

The Mercer Advisors experience

The investment planning process begins by first identifying our destination. What does success look like for us? How will we know when we’ve arrived? Good answers to those critically important questions are crucial to identifying in which direction to navigate and how far our bridge should extend. Once we know our destination, the next step requires taking a comprehensive inventory of our assets, liabilities, health, family situation, and human capital, constructing a picture of where we are today. In the final step, we connect the dots between where we are and where we want to be — through portfolio selection and financial, tax, insurance, and estate planning strategies — to safely build and cross that bridge.

 

Data-driven insights

As fiduciaries committed to the science of investing, we believe our investment recommendations must always meet or exceed the most rigorous standards. To that end, our investment process begins with an evaluation of peer-reviewed academic research. Such analyses typically include reviewing data, analytical methods, or research assumptions; they might even include a meeting with industry thought leaders or academics to discuss their work. Once we’ve identified a successful investment theme, asset class, or portfolio factor, our Investment Committee conducts an extensive search to identify managers with expertise investing in these themes, asset classes, or factors. We use a combination of tools to evaluate managers — Fi360, Morningstar, Bloomberg, FactSet, YCharts, and Portfolio Visualizer, among others — to gain deep insight into holdings, portfolio construction and rebalancing methodologies, risk-adjusted returns, factor metrics, and pre- and after-tax performance (net of fees) versus relevant benchmarks. Analytical techniques include (but are not limited to) multiple regression, one- and two-sample hypothesis testing, scenario-based stress testing, and Monte Carlo simulation.

 

More than the sum of its parts: Mercer Advisors collaboration

At Mercer Advisors, we firmly believe that no one of us is smarter than all of us together. We strive to deliver superior outcomes by working as a team. Our Investment Team collaborates closely with your wealth advisor and the CPAs, attorneys, portfolio consultants, and insurance experts on your dedicated Wealth Solutions team to provide highly personalized investment advice tailored to your unique needs.

We believe investing isn’t a form of entertainment but a means to an end. Investment planning is a human-centered endeavor that starts where we are today and helps lead us to where we want to be tomorrow. Therefore, everything we do in the investment planning process is focused on achieving client objectives — and not hitting home runs or outperforming markets. We believe prudent risk management is critically important to having a good investment experience and achieving goals with confidence. With those ends in mind, we use a scientific investing approach, ensuring that our portfolios remain academically informed, low-cost, institution-grade, and practically implemented.

At Mercer Advisors, we are honored that our clients entrust us with their finances, and we pride ourselves on the fiduciary care we take to protect investments and seek superior outcomes. We would like to help our clients connect the dots — build the bridge — between today and their best-possible tomorrow.