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As part of a workshop I attended this past weekend, I was assigned to a small group of workshop participants and sent off to dinner at an undisclosed restaurant.  It turned out to be a great way to have a new experience with a new group of people and we were particularly fortunate to wind up at a fantastic Japanese restaurant.

On the way to dinner, talk turned to TAAG and our approach to financial planning and investing.  As we entered the restaurant, a bonsai tree on the hostess stand provided a nice segue to a client conversation from earlier in the week.

In many ways, our approach to investing, planning and serving our clients is comparable to the Japanese art form Bonsai.  Whether dealing with a small shrub or your long term goals, hacking away at any area of concern is rarely the answer.  It is constant, careful attention that produces the most favorable results.

As we look at investing, planning and how we approach client service, several more examples where careful pruning and patience are key factors come to mind. . .

Building Portfolios

We regularly review our portfolio models to make sure that our overall goals are being met.  In a recent review, we determined that one of our fixed income funds, the DFA Two Year Global Fixed Portfolio, was behaving too similarly in duration and return historically to a similar one year fund we use.  We made the decision, as rebalancing and cash needs arise, to slowly diversify out of the two year fund in favor of spreading those funds across the other fixed income options in those portfolios over the remaining fixed income options to get us closer to our long term goals.  This act of pruning is a minor, but purposeful move to make sure we’re delivering the market exposure we seek for our clients.

We also see small changes with long term big impact in the expense ratios of our portfolios.  Recently, Dimensional Fund Advisors (DFA) announced fee reductions in their DFA International Real Estate Securities Portfolio and DFA Global Real Estate Securities Portfolio.  The respective reductions of 0.1% and 0.07% may seem minor and not immediately recognizable, but over time will put additional dollars in investors’ pockets.


Our approach to rebalancing is one of patient vigilance.  While we monitor each individual account on an ongoing basis for opportunities, we certainly don’t trade that often.  When opportunities do present, we’re there and ready to prune profits from the healthier asset class or “branches” to use our analogy in order to provide fuel and allow room for other areas of the portfolio to grow.

Financial Planning

In most every meeting, we’ll ask clients whether there have been any changes to goals, review what assumptions we’re currently making and update all asset balances as a way of pruning the plan.  We’re careful to explain that we don’t want to get caught up in the false sense of precision.  We don’t know how the tree is going to grow.  But, we do know that with this attention to our inputs and actions, a healthier, more accurate long term plan results.

Client Service

We review our business practices regularly for attempts to make improvements.  A recent example is the change we’ve made to our client service agreements.  As with any regulated industry, these agreements are fraught with legal language.  But the first page of the agreement where we explain our services offered an opportunity to lose some of this confusing verbiage in favor of a plain English explanation as to what clients should expect from a relationship with TAAG.

As market volatility returns with news of our recovering economy continuing to weigh on the future of interest rates, the strength of the dollar and countless other factors, we’ll continue to use this process of patient cultivation to ensure that clients continue down a path to success.

Have a great week!