We all know personalization is a thing these days. It’s everywhere: shopping, music, dining, advertising (ugh!), travel, and beyond. Inevitably, the broad trend toward bespoke solutions is also making its way into financial planning and money management.
It’s fair to say that investors’ financial plans have long featured a high degree of personalization, almost by definition. Each household has specific goals, time horizons, relationships with investment risk, cash flows, etc. And those particulars should generally be reflected in their financial plans, whether those plans are general/high-level or specific/granular.
Then a funny thing often happens as we move from financial planning to portfolio construction. The personalization disappears.
In a typical process, advisors help clients assemble and refine their financial plans…then offer a risk-tolerance questionnaire and assign a household to one of a firm’s few model portfolios (some of which are built in-house, many of which are adopted from a home office or a third-party asset manager).
That might work out great if the model is thoughtfully assembled and efficiently implemented. But where did clients’ unique wants and needs go? How does this model-assignment process accommodate or reflect changes in household cash flows, the capital markets, or time horizons? Typically, alas, it doesn’t.
But help is on the way in the form of Nebo Wealth, a remarkably powerful optimization platform that helps Interlake build perfect-fit portfolios for our wealth management clients.
Developed by a team of ambitious thinkers inside institutional asset manager GMO, Nebo represents the next generation of asset management for individual investors.
At the heart of the Nebo framework is a reimagination of investment risk, not as short-term volatility, but as the likelihood that investors don’t have what they need when they need it (or what they want when they want it). This common-sense notion of risk drives Nebo’s portfolio optimization process, seeking to minimize the likelihood that investors don’t achieve their unique (often multiple) goals.
By synthesizing current assets, time horizons, financial goals, cash flows, risk tolerance, and capital market assumptions, Nebo helps Interlake build portfolios that fit each client household with remarkable precision. When markets shift and investor circumstances change, these portfolios don’t rebalance to static asset allocation targets; they re-optimize to reflect new parameters. They're inherently and intelligently dynamic. And they can seamlessly incorporate illiquid positions such as a closely held business, real estate, or concentrated stock.
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This process offers more than the opportunity to benefit from precision-built portfolios; it delivers a higher level of confidence in the program we build together. It reflects changing realities at the micro level of the investor household and the macro level of the capital markets. It allows Interlake to build hyper-efficient portfolios using our thoughtfully curated set of implementation choices (i.e., mutual and exchange-traded funds in a full range of global asset classes, including liquid alternatives).
This is the future of personalized asset management. It’s an institutional-quality process delivered to Interlake’s wealth management clients. It’s as good as it gets in this business, and we’re thrilled to be a part of the Nebo community of advisors. If you’d like to discuss whether Interlake and Nebo Wealth can help you reach your financial goals, we’d love to do so.