How We Think
Informed Design. Thoughtful Process. Intentional Results.
At BMSS Wesson, we think our first responsibility is to understand our clients’ needs and values. We refuse to let all that our clients believe in and work for become disassociated afterthoughts in the investment process because we understand that the long-term investment we are making is in the lives of our clients and their relationships. When our clients gain an accurate perspective for how they are attaining financial security for their family, an enormous sense of clarity and confidence results. That understanding frees them to invest in the people they care about, the causes they believe in, and to make a lasting difference in the lives of their family and friends.
Fee Only Fiduciary Model
The financial services industry is replete with conflicts of interest, which encourage advisors to place their own financial interests above a client’s best interest. Usually, conflicts of interest result because advisors have been willing to accept significant outside financial incentives or payments to sell products counter to their clients’ best interest.
At BMSS Wesson, we have chosen a “fee-only fiduciary” model because it is the only way we can completely align our financial interests with those of our clients. “Fee-only” means we only accept fee-based compensation for services provided and are completely transparent in how we charge for our services. The “Fiduciary” requirement mandates that we act always and only in our clients’ best interest – no matter what the circumstance is. We think these commitments are common sense and long overdue from our industry.
The Science and Art of Integrated Financial Planning
Science is the process of discovery and the application of sound principles to derive truth from a particular fact set.
Each client is unique. This means we must walk through a robust discovery process with each family before reaching a high confidence level that we fully understand their needs and objectives. After we understand their fact set, we apply the principles of financial planning – risk identification and mitigation, balance sheet optimization, integrated tax planning, evidence-based investing, and so on – to arrive at a set of recommendations that give them the highest probability of achieving success.
Art is not an arbitrary, subjective process where the contribution from science ends. Rather, art helps close the gap between perception and reality.
However, science can only take you so far. Often, gaps remain between desired outcomes and reality. This disconnect can ultimately lead to dissatisfaction and poor results. The art of financial planning is the ability to ask the right questions to reveal the gaps between our clients’ perceptions and the reality of their financial situation. Discussing scenarios and potential alternatives reveals the right answers. Closing the gap reduces expectations misalignment, frustration and future pain.
When investing truly becomes about what is in the best interest of the client, conventional approaches are no longer satisfactory. Needless activity and black-box complexity are properly viewed as being costly and counter-productive. Emotional and unsubstantiated opinions that vary with the market’s latest fluctuations are avoided in the investment management process. A passion for evidence-based portfolio design, simplicity, and a commitment to transparency become the new imperatives.
The evidence from decades of peer-reviewed academic and practitioner investment research is clear:
- Markets work over time and have historically rewarded investors for the capital they have provided, while “market timing” and “stock picking” have overwhelmingly disappointed investors relative to lower cost, systematic strategies.
- Investor behavior, asset allocation, and tax management are the primary drivers of long-term returns for private investors.
- Managing the costs of transactions, taxes, and third-party fees is critical to preventing return erosion.
- Concentrated (i.e. undiversified) portfolios can significantly increase the probability of permanent capital loss and should be avoided if possible.
- Expertise in portfolio construction, risk management, and trading is critical to effectively implement strategies in competitive markets.