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In the first part of this blog post, we discussed how much an investor can lose in the portfolio construction process if they don't use a good advisor as calculated in a Vanguard Group paper from 2014.  We also discussed how Covenant approaches those aspects of the portfolio construction process to add that value for our clients. The parts of the study discussed previously showed a loss  of anywhere from 40 basis points (0.40%) to 115 basis points (1.15%) a year depending upon the clients' tax bracket and asset mix.   This did not include any value from the correct asset allocation or a total return approach, which were deemed significant, but not quantifiable.  In this part, we move on to the Wealth Management and Behavioral Coaching services described in the study and that Covenant provides.

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Many investors have seen studies showing that most funds do not outperform the market averages and have concluded that they do not need an advisor.  If they can't beat the market why do I need them?  As the Vanguard Group of Funds is closely associated with low cost index investing and do-it-yourself investing, they would be the last place you would expect to come to advisors defense.  Yet, that is just what they did, coming out with a study quantifying how much money investors are leaving on the table by not using an advisor.  They looked at three areas - Portfolio Construction, Wealth Management and Behavioral Coaching and found that investors could be losing about 3% points of portfolio returns after taxes and fees over time. Needless to say, because this amount is far more than what Covenant charges, we were intrigued.  Because each client is different and not all strategies apply to all clients in the same proportions, or at the same time, the timing and amount of loses varies, thus limiting the authors precision to 'about 3%'. Below and in Part 2, we will summarize the study's findings and also examine how we approach these areas at Covenant to keep our clients ahead of the game.

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Should Britain stay part of the European Union (the EU) or should it leave and go it alone, commonly referred to as “Brexit”. As of now, Britain is part of the European Union (though not part of the Euro currency).   Britain's $3 Trillion  in gross domestic product (GDP) makes up 17% of the $16 Trillion GDP of the entire European Union.  For perspective the US GDP stands at $18 Trillion.   On June 23, 2016, British citizens will be voting on whether to stay a part of the EU or not. Current polls show by a slim margin that they will stay in the EU. However, polls have not been very reliable lately as predictive tools and consequently there is no certainty as to what the outcome of the vote will be. In this note, we will try to highlight the potential impact of staying in the EU and for a British exit (Brexit) from the EU.

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After the sharp sell off the markets experienced at the start of the year, it is no wonder that investors may be more receptive to the old Wall Street adage of 'Sell in May and go away.'  What's not to like about taking one's profits and enjoying some time off from the volatility of the markets?  Maybe on a nice sunny beach with a cold adult beverage.  But I digress.   While it sounds appealing, is it an actual strategy, or just another catchy turn of phrase?  And if it is a strategy what do you gain from it?  Thankfully people with fancy initials after their names and a lot of time on their hands have done studies of the matter. 

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I was going through my mail when I came across a postcard for a retirement planning event at a local restaurant in Westfield.  While I like a good meal as much as the next guy, sitting through the inevitable sales pitch would probably spoil it.  I was about to throw it away, when I noticed a long string of initials after one of the presenters' names.  It certainly looked impressive and I decided to take a second look.

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