Asset Allocation Strategies

Asset allocation is an investing strategy in which investors split their portfolios among several asset classes to reduce risk and maximize returns. Many financial experts believe that asset allocation is critical in determining investment portfolio performance. The concept behind asset allocation is that various assets with inherent risks perform differently in different market and economic situations.

An asset class is a collection of economic resources with relative risk and return characteristics. Although there is substantial debate over how many types of assets exist, many market experts and financial consultants split assets into five categories: equities, bonds, cash, real estate, and futures. The most liquid asset classes, and the most quoted, include stocks, bonds (fixed-income instruments), cash or marketable securities, and commodities.

Alternative asset classes include real estate and valuable merchandise such as artwork, stamps, and other trade collectibles. According to some analysts, cryptocurrency, venture capital, and hedge funds are all examples of alternative investing. However, illiquidity does not indicate a lower return potential. It simply shows that finding a buyer to convert the asset to cash may take longer.

There are many investment allocation strategies. Dynamic asset allocation is the most common investment strategy. It allows investors to modify their investment proportions based on market highs and lows, as well as economic gains and losses. Unlike other asset allocation portfolios, dynamic asset allocation portfolios maintain a high exposure to their original asset classes. However, unlike other asset allocation portfolios, dynamic asset allocation portfolios adjust their positions over time in response to changes in the economic environment.

Another investment allocation strategy is the constant-weighting asset allocation. The constant-weighting asset allocation is a buy-and-hold strategy. Investors buy more of a stock when it loses value and sells when it increases in value. Investors here ensure that the proportions do not deviate more than five percent of the original mix.

Tactical asset allocation is a strategy in which an investor takes a more active approach to asset allocation, attempting to position a portfolio into assets or individual equities with the greatest potential for perceived gains. Tactical strategies are frequently traded more aggressively and are free to move totally in and out of their core asset classes. In contrast, original asset mixes are created similarly to dynamic portfolios.

The age-based asset allocation is another example of the investment allocation strategy. In this investment strategy, the investment decision is made based on the age of the investors in age-based asset allocation. As a result, most financial advisors advise clients to base their stock investment selections on subtracting their age from a starting point of 100. The investor's life expectancy determines the amount. The higher one's life expectancy, the more money they put into risky investments, such as the stock market.

Another allocation investment strategy is the life-cycle fund asset allocation. The life-cycle funds' allocation, also known as targeted-date funds allocation, are asset-allocation funds that automatically alter the percentage of each asset class as the planned retirement date approaches, lowering risk. In practice, this typically means a rise in the share of bonds and other fixed-income assets. It is also used to maximize their return on investment (ROI) based on criteria such as their investing goals, risk tolerance, and age. However, due to challenges with standardization, this type of portfolio structure is complicated.

Series 63 - Exam Layout Information

Lisa Detanna is a Beverly Hills, California resident who has served as a senior investment manager with Raymond James since 2011. In this capacity, she focuses on financial planning and investment advice as well as the protection of assets through insurance. Lisa Detanna also holds Series 7, 63, and 65 securities licenses.

The Series 63 Exam or Uniform Securities Agent State Law Exam is a mandatory exam for professionals who intend to work as broker-dealer agents for security investors. Series 63 license is awarded to candidates who pass the exam as they have demonstrated a thorough understanding of fiduciary responsibilities and ethical principles. In addition to the Series 63 test, the FINRA SIE, as well as either the Series 6 or Series 7 exam are required co-requisites that must be passed before a candidate may seek to register as a broker-dealer agent with a state.

The Uniform Securities Act of 1956, as well as the NASAA Statement of Policy and Model Rules, are required reading for test candidates. The fundamentals of state securities regulations and rules banning dishonest or unethical acts are covered in the Series 63 test. 45 percent of the questions are about rules, 10 percent about administrative procedures, 20 percent about customer communication, and 25 percent about ethical practices and corporate duties.

The test consists of 60 multiple-choice questions. The passing mark is 72 percent, or 43 questions out of 60. Candidates must finish the exam within 75-minutes.

401(k) Balance When an Employee Resigns?

The recipient of an MBA in finance from Pepperdine University, Lisa Detanna maintains executive responsibilities as senior vice president of investments with Raymond James. In this role, Lisa Detanna works with high-net-worth individuals, providing them with a comprehensive range of financial planning services including risk management, tax preparation, as well as retirement planning.

A 401(k) is a type of retirement plan offered by an employer. It enables an employee to set aside a portion of their pre-tax pay towards retirement. These funds are spread over a variety of assets, including bonds, mutual funds, and equities. Because 401(k) contributions are not considered income, they can help employees maintain lower tax brackets.

If an employee with a 401(k) account resigns, their employer can cut them a check for the amount in their account if this is less than $1,000. Ideally the employee should immediately transfer the funds to an individual retirement account (IRA) within 60 days, otherwise they will be subject to taxes.

If an employee's balance is between $1,000 and $5,000, their employer can transfer the funds to an IRA of their choosing. For an employee with a balance over $5,000, the employer may not withdraw money from their 401(k) unless the employee gives permission for this.

Multi-Generational Wealth Planning

Lisa Detanna has been named one of the country’s top financial advisers, making it to the top 100 list for Forbes and Barron’s for several years. With her work in Raymond Jones, Lisa Detanna focuses on multi-generational wealth planning and helping affluent and high-net-worth families prepare the next generation to manage their assets.

One of the most frightening statistics that family-owned businesses face is that only 30 percent of them survive to the second generation, and even less to the third and onwards. Multi-generational wealth planning for a family office became one of the essential methods of discovering concrete methods to preserve the family’s net worth and assets and even potentially increase them in the next generation. A lack of trust between the wealth builder (i.e. the original generation) and the descendants is the most frequent reason for lost wealth and assets. The leader of a family office needs to plan on educating the heirs for proper wealth management and exposing them to the business at the right time.

Long-term investing plans can look beyond quarterly changes and make up for short-term losses. An airtight succession plan also eases the transition of wealth from one generation to the next and provides guidelines for each descendant’s role in the family office.