Investment Management Process

The investment process begins with determining performance goals and objectives, time horizon and risk tolerance, all of which are identified in the investment profile. In some cases (institutional portfolios, pensions, endowments, etc.), key aspects of the investment profile are documented in an investment policy statement that formally establishes all investment performance, quality, risk and measurement guidelines.

ECA works with outside national and regional consulting firms such as Mid Atlantic Capital Group to research, screen and make available some of the best nationally known investment management firms to manage designated portions of client portfolios. These relationships give us access to a large data-base of active and passive managers as well as investment indices to assist clients in maximizing their portfolios for the best mix of investment size, style, asset class and risk monitoring. ECA clients receive the important consulting contact and process education, while obtaining the investment management services of some of the best investment advisory firms in the U.S.

Turmoil and uncertainty are ever present in the investment marketplace, but investment opportunities are always being created within all asset classes. Asset classes are the different types and terms of fixed income securities and the equity universes of large, mid size and small companies – both domestic and international. In today’s fast moving economies of the world, it literally takes a “crystal ball” to consistently predict what asset class will be hot and what asset class will not be hot - and everyone knows – there are no crystal balls.

That is the reason ECA recommends building a base asset allocation plan for every investor prior to selecting professional money managers or investing in individual stocks, bonds or mutual funds. The cornerstone of ECA’s philosophy is asset allocation – developing a customized plan to invest certain percentages of investment portfolios among the various equity and fixed income styles that specifically addresses the needs, desires and expectations of each and every client. For example, a moderately conservative portfolio allocation model might look like the following:

Equities:

Index	5%
Equity Income	8
Large Cap Value	10
Large Cap Growth	5
Mid Cap Value	3
Mid Cap Growth	2
Small Cap Value	3
Small Cap Growth	2
Micro Cap	2
International	10
Real Estate	5
Hedge	5
Total Equity	60%
Total Portfolio	100%

Once the asset allocation plan has been established, ECA recommends professional advisors to manage each of the asset classes, and then monitors each manager for risk-adjusted performance against an appropriate benchmark. ECA also monitors each manager for style purity (adhering to the advisor’s stated philosophy and style). These professional managers each have expertise and experience managing within their specific asset class and style.

Most of these top-performing managers require high investment portfolio minimums. To make them more available to smaller portfolios, Counsel Trust, ECA’s partner has created private pools (also known as common trust funds), enabling clients to invest as little as $1,000 in a fund. In other words, if a $100,000 portfolio asset allocation plan calls for a 2% investment in small cap growth, just $2,000 could be invested in the Counsel Trust Small Cap Growth Fund.

ECA negotiates lower fees, and then monitors the performance of managers compared to appropriate market indices. Results are reported to clients quarterly. Our large asset base and volume trading enables us to deliver top-flight money management firms to our clients at reasonable cost. In many cases, these managers would not be available to individual clients because of portfolio size requirements. ECA clients thus receive the important local consulting contact and connection, while obtaining the investment management services of some of the best investment advisory firms in the U.S.

Regular re-balancing of client portfolios to the asset allocation plan is a very significant part of the investment process. Re-balancing involves trimming those asset classes that have appreciated beyond the stated percentage earmarked in the plan. Trimming (or selling) an appreciated asset class most often occurs when stocks are at or near their highs. Sale proceeds are then redeployed into asset classes that have declined (often where stocks are at or near their lows). The re-balancing process is therefore a built in discipline to sell high and buy low.

Our role as consultant sets us apart from the typical trust, investment, brokerage and mutual fund firms. Our goal is impartiality – always working in the best interest of the client. We remove the conflicts of interest typically found in many areas of the investment business.

Investment Profile Here is a sample Investment Profile for Individuals: The first step in making the right investment choices is to determine your investor profile. The profile helps define your investment objectives and attitudes toward investing. Please answer each question by circling or checking the appropriate response. Click to Investment Profile (PDF Document)