Account Investment Guidelines

In general, the purpose of Account Investment Guidelines statement is to outline a plan, which will guide the management of your holdings toward your goals. It is intended to be clear, yet broad enough for usefulness. It is meant to be stay fixed but will be reviewed with you at least annually.

The first and most important step in the process is record your risk and return profile by using Account Investment Guidelines. Objectives to set your goals and constraints mark your limits. Then, the implementation of the plan is how to reach your goals.Account Investment Guidelines


  • Purpose 

    Plain English statement stating your account purpose. Chiefly describes your need or needs for use of your holdings. Once written it rarely changes unless your life changes i.e job, marital, health or lifestyle issues.

  • Return

    Nature of your desired cash flow. It usually is some mix of growth and current income. Growth may be for your benefit or for future heirs. Current income may have a fixed nature to it or may have a reserve need.

  • Risk Tolerance

    Your view of changes in value and current income are compared to an average person with the same traits.  While you may think you have an idea of your views, it is best to make the final call from a third-party angle. Your risk profile may be at odds with your own view life risks. Your health should be taken into the mix.


  • Time Horizon

    This is time frame for using funds stated in your purpose. It is not dependent on your age, i.e.grandparents building a fortune for their offspring, young adult building funds for starting a business or buying a house or a teen saving for college.

  • Liquidity Needs 

    Amount of cash you desire be transferred in one day to be held liquid at all times.  Holdings most often are invested in positions which may take up to a week to settle and have the cash available, unlike a bank account where you have instant access to your funds. Market may make selling undesirable. Usually a function of the your income needs are kept on hand.

  • Income Needs

    Your monthly income needs to be paid out via a check or money transfer to your outside checking account.  This cash flow can be your main means of support or a boost to your outside income sources.  Also, it might be a cash flow streaming into your account when your outside income sources may be creating a surplus.

  • Tax Bracket 

    Your fed, state and local  tax rates.  This constraint mainly applies to your taxed accounts from income and gains. Your IRAs and other plans are exempt from capital gain and income taxes.  You are taxed only when funds are paid from your account.

  • Legal

    Restriction by trust or laws.  By default the rules and laws for your assets apply in an agency framework.  In the case of a trust, your provisions of your trust document govern the handling of your assets. Retirement plans have their own legal framework which we need to be considered when running your plan.  IRA and other plans have limits. Gains and income are not taxed until paid out. They are taxed at your normal income rates unless rolled over.

  • Unique Circumstances

    The default is  none but these are limits you can request.  It must be noted, your unique needs may hinder the handling of your holdings when certain asset groups are deemed off limits.


  • Strategy

    Once your goals have been stated, an asset mix is matched to your guidelines based on the market outlook over many business cycles. Ways to produce current income and hold your reserves are put into place.

  • Asset Allocation 

    Three asset classes are used: stocks, bonds and cash.  A target mix of risky to less risky asset classes is set up to match your profile to the market outlook for at least a complete business cycle.  Your targets as articulated in your Account Investment Guidelines remain constant in all market environments and avoids trying to ‘time the market’. As the result of market action or portfolio additions or withdrawals, the actual allocations of the portfolio will deviate from the target allocation.  When the deviation reaches two percent or greater, trades are made to bring the actual percentages in line with your targets.  This insures buying low and selling high without regard to market timing.

  • Foreign Exposure

    A key area of portfolio management is controlling your risk.  Another layer is geographical diversification. Global economies don’t march in lock step, add a layer of currency fluctuation and have unique return opportunities. Target proportion of foreign-based securities denominated in non-dollar currencies are used in construction of your portfolio and spelled out in your investment guidelines.

  • Vehicles

    Investable securities have different configuration types with unique characteristics and add value depending on the size of the portfolio and your needs. Individual issues have one primary issuer, generally a public corporation.  Exchange Traded Funds (EFTs) and mutual funds are a basket of corporations, bonds or commodities.  These funds offer diversification and lower risk profiles. SCM generally uses individual issues in larger portfolios for their flexibility and ETFs in smaller portfolios.  Additionally, a third asset vehicle, money market funds, are used in both types.

  • Tactics

    Sometimes market conditions or unique circumstances don’t allow your long-term strategy to be implement immediately.  Techniques such as ‘dollar cost averaging’ or ‘tax harvesting’ are used depending on the situation.

Account Investment Guidelines communicates your objectives to us and makes the process more effective. Finally, for more info about the theory behind the process visit our Investment Philosophy page.