Putting Client Interests Ahead of the Firm's
Orcam Financial Group is a financial services firm offering asset management and consulting services at a low fee. We believe that Wall Street’s typical services are substantially overpriced and misaligned with the interests of clients.
At Orcam we focus on ensuring that the client not only pays a reasonable fee for high quality services, but is involved in a relationship in which the asset manager’s interests are aligned with those of the client.
We combine this low fee and client focused approach with our sophisticated macro portfolio management style to offer an unrivaled overall portfolio management experience.
Low Fee - Tax Efficient - Index Based - Macro
Our approach to asset management is different from the typical Wall Street firm. We offer a sophisticated global macro approach that focuses on reducing fees, maximizing tax efficiencies, and reducing portfolio frictions while aligning the financial goals of our clients with the proper levels of risk. At Orcam we believe a sophisticated portfolio management approach should be accessible to investors without the high costs.
The 30,000 Foot View
“The big picture matters like never before.”
If the last five years have taught us anything, it’s that understanding the monetary system matters. Investors and asset managers who didn’t understand the operational realities of the monetary system made devastatingly erroneous predictions about the direction of interest rates, inflation, stocks, commodities and the economy in general. At Orcam we believe asset managers should understand the macro monetary and financial system in order to reduce the risk of making portfolio management errors. This requires a sophisticated understanding of the institutional design of the monetary system, the banking system, the global payments system and the macroeconomy.
Understanding the “Total Portfolio”
When one understands the monetary system at the 30,000 foot level it becomes clear that our “investment portfolios” aren’t really “investments” at all. Instead, our portfolios are repositories for savings that have been accumulated. For most of us, our real “investments” are made in maximizing our primary source of income and maximizing our value to others within the economy. What is widely perceived as our “investment portfolio” is actually a savings portfolio that has been allocated to various outstanding assets. This repository of savings isn’t gambling money that should be thrown around at the mercy of the stock market rollercoaster. It is our hard earned savings and should be protected from potential risks in a prudent and balanced manner.
“The financial markets aren’t where you get rich. The financial markets are where you allocate a portion of your savings to protect against purchasing power loss and the risk of permanent loss.”
Orcam’s Total Portfolio approach helps us properly align the way our clients perceive risk with an asset allocation and portfolio that is appropriate for them.
Risk is one of the most misunderstood concepts on Wall Street. Most academics and market practitioners perceive risk as “volatility” or standard deviation. But this perspective is not aligned with the way most investors actually perceive portfolio risk.
“Risk comes from not knowing what you’re doing.”
For most of us, risk is simply the potential that we will not meet our financial goals. The biggest risks in our savings portfolios are the loss of purchasing power due to inflation and the risk of permanent loss due to price declines. If one can outperform inflation, reduce the risk of permanent loss and do so with moderate risk adjusted returns then they will have a high probability of achieving their financial goals. Unlike most asset managers who charge high fees selling the idea of “beating the market”, we focus on generating positive risk adjusted returns to ensure that your portfolio is helping you to achieve your financial goals.
The biggest problem in portfolio management is managing the dynamism of the asset markets with your risk profile. While our risk profiles tend to be static in the short-term our exposure to different asset class risks is constantly changing. This means that our risk profiles tend to become misaligned as the business cycle unfolds and the financial markets change. This leaves us exposed to big stock market declines late in the business cycle and underexposed to bull markets early in the cycle.
We know that assets tend to become more risky as they increase in price and less risky after price declines, yet the majority of investors react to asset price changes without understanding that chasing performance often means chasing higher risk. Our research shows that many asset classes become more/less risky as the business cycle unfolds, but a static asset allocation approach leaves investors overweight high risk assets at the riskiest point in the cycle. In other words, your risk profile remains the same, but the actual risk of the asset classes has shifted. For instance, a 60/40 stock/bond portfolio is riskier in the latter stages of the business cycle than it is early in the business cycle primarily because stocks become riskier relative to bonds as the cycle plays out.
A Countercyclical Indexing strategy can be implemented in such a way that you’re systematically reducing exposure to risky assets as the market cycle gets long in the tooth and increasing exposure to risky assets as the cycle begins. Most importantly, this index based strategy can be done in a diversified, low fee and highly tax efficient manner. It’s low cost indexing done in a more practical manner.
We know you have a multitude of options when it comes to investment managers. We firmly believe that our unique combination of automated services with a human advisor has created one of the most comprehensive low cost advisory services available. The table below shows how we compare to the many available options out there today:
1 – Orcam’s fees may vary depending on portfolio specifics. The Do-It-Yourself average of 0.64% is based on the average cost in the 2015 Morningstar study on investor fees. The vast majority of individual investors are still using high fee mutual funds and high cost ETFs.
2 – Static Modern Portfolio Theory refers to the tendency for these asset managers to invest in buy and hold “stocks for the long-run” type portfolios that often leave an investor’s underlying asset allocation overly aggressive and misaligned with their profile at times during the business cycle as well as throughout their lives.
3 – Diworsification refers to the tendency for asset managers to hold an excessive number of funds (10+) that gives the appearance of doing something superior when the reality is that this often times simply results in higher fees and the illusion of justifying those high fees.
Getting Started is Easy
Opening an account with Orcam is not only safe and secure, but easy. We believe in 100% transparency and third party custody to reduce the potential for any conflict of interest and maintain account ownership and control in the hands of the client. We use only the highest quality custodians and brokers to ensure the safety and soundness of our clients’ assets.
The process begins with a brief phone introduction to make sure you’re a good fit for Orcam and also to ensure that Orcam is a good fit for you. We then run an in-depth risk and account profile so we can ensure that we put ourselves in your shoes when we apply the proper portfolio construction process. In the future, you can can rely on us to monitor and manage the account and you can focus your attention on what is most important to you.
If you want to optimize your portfolio, reduce fees, invest efficiently, diversify and reduce the burden of managing your assets then contact us today.