Process & Methodology

We view each potential client interview as an information discovery meeting. However, it is about discovering information about the investor, not about their current investments.

In this session, the first step is to identify the investor’s most cherished goals. The second step is to discuss a plan to meet the goals, against which progress may be measured. The third step is to construct a portfolio of investments—whose role is as servant to the plan— that based on historical returns would have enabled goal attainment in the time allotted. Most investors don’t identify portfolio construction as the third step, but rather as the only step. As a result, they end up having a speculation, rather than an investment portfolio, and they are left to make frequent changes in response to current events and the financial media. Once we develop a plan, our main role is to coach our clients so that human nature doesn’t blow the plan up through a long investment lifetime marked by many passing fads and fears. Our investment vehicles are almost exclusively made up of low-cost and tax-efficient index funds.


The goal is to construct a portfolio of investments—whose role is as servant to the plan—that based on historical returns, as against the historic rate of inflation, would have enabled goal attainment in the time allotted.

We begin our relationship, as most advisors do, by listening to and understanding our client's perceptions of wealth and what they would like their assets to help them accomplish over time. It’s imperative to achieve a mutual understanding that our job isn’t to attain “alpha”—the specific performance of an investment relative to "the market"—or to outperform a random benchmark; rather, our job is to develop a plan that offers our clients a high probability of maintaining and even enhancing their standard of living and that of their heirs to whom they eventually hope to leave a legacy.

The agreed upon plan and mutual understanding of how we move forward together is what our clients appreciate most in a relationship. The plan is the medium governing how we relate to each other as advisor and client. The clarity of investment thought and the precision of a long-term plan designed to maintain and potentially increase standards of living, regardless of market conditions and temporary market declines, are hallmarks of the Fusion advisor/client partnership.


Declines are temporary. Increases are permanent. 

So what’s the answer? 

How Fusion Views The Role of
Bonds & Asset Allocation.

Determining the amount of money required to accumulate in order to retire comfortably, stay comfortably retired and to leave a legacy is the first step in the planning process. For the plan to work, it is essential to establish how much income is needed to support two-to-three years of annual living expenses and to set that amount aside. The average time, since the 1920s, for the stock market (S&P 500) to move from a peak (all-time high) to a trough and back to the previous high is 40 months. Therefore, holding two-to-three years of living expenses in bonds/cash provides a high probability that an investor will not have to sell any meaningful portion of their stock portfolio during a decline, in order to supplement living expenses.

As a result, Fusion’s clients typically end up with investment allocations that are more heavily invested in that which historically leads to the preservation and enhancement of purchasing power (the safety of stocks). Conversely, they end up with far less exposure to allocations of fixed income/bonds (the risk of bonds), which lead to the freezing and destruction of purchasing power.

The industry counsels too heavy a weighting in bonds as a result of incorrectly defining risk as volatility and incorrectly defining risk and safety in terms of the need to preserve principal, rather than the need to protect against the dominant and real risk—which is the need to preserve purchasing power, or the erosion of our ability to keep up with the ever-increasing cost of living.

In sum, the industry’s advice leading to traditional 60% stock/40% bond, 70% stock/30% bond, etc. asset allocations is a result of the dangerous and flawed belief that it is important to minimize the downward temporary movements in a portfolio as one ages and retires. Acting on that belief, the industry’s asset allocation advice often leads investors to begin running out of money by freezing too much of their income and asset values, which overexposes them to the risk of bonds. Fusion believes the only role of bonds is to allow the investor to set aside two-to-three year’s worth of living expenses, enabling them to enjoy a larger allocation to the safety of investments that protect and grow their purchasing power (diversified stock index funds).

We don't espouse traditional allocation, rather, we believe in derivative allocation – the amount to be placed in bonds or cash is derived from how much an investor needs to spend over a full market cycle (peak-to-trough and back). This is as opposed to traditional stock/bond allocation designed to minimize temporary declines and to destroy permanent increase and purchasing power.

Fusion Family Wealth believes it’s important to invest in companies domiciled outside of our borders. Typically, our recommended portfolio structure is approximately 60% domestic/U.S. (with 1/3 of that exposed to small- and mid-cap companies). The remainder is exposed to international companies split evenly between developed international countries and emerging markets, primarily Asia and India. What is characteristic of our investment vehicles, in general, is that they are almost exclusively index funds.

The only meaningful benchmark is your investment plan. It serves as the guidepost against which we will assess whether and when any adjustments may be needed over time to stay on target with objectives.

*Please Note: Limitations.  Different types of investments involve varying degrees of risk.  Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended and/or undertaken by Fusion) will be profitable, equal any historical performance level(s), or prove successful.

Learn about who our clients are at Fusion Family Wealth.

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