The Yeske Buie Playbook
Super Bowl LIV will see the San Francisco 49ers square off against the Kansas City Chiefs in Miami, Florida on Sunday, February 2. News outlets of every sort are filled with predictions of winners and point spreads. Sportscasters, meanwhile, endlessly debate the strengths and weaknesses of each team’s offense and defense, with the spotlight turned brightly on top players, head coaches, and team owners.
And just as each team will arrive at Hard Rock Stadium armed with a playbook that blends hours of research with the ingenuity of the leagues’s top strategists, Yeske Buie has its own financial planning playbook, designed to tilt the odds in our clients’ favor. We thought we’d take this opportunity to share the key elements of Yeske Buie’s Creative Strategies and Grounded Wisdom® playbook.
PLAYBOOK GUIDING PRINCIPLES
- We don’t know what the future holds or how our needs will change over time.
- The economy and the financial markets are too complex and chaotic for reliable short-term prediction.
- Complex chaotic systems possess regularities, however, which can be observed and incorporated into our plans.
- It’s best to think big picture when planning for the future.
- Don’t bet it all on just one outcome!
- A focus on resilience and flexibility is the best way to meet the challenges of an unpredictable world.
OFFENSE – “The best defense is a good offense”
- Continuous Discovery
The start of our relationship with a client and the beginning of any subsequent meeting is devoted to discovering who they are, what matters most to them, and how we can best serve them as financial professionals.
- Annual Meetings
Our annual meetings are a chance for us to get reacquainted and discuss new developments so we can ensure that existing financial planning strategies are still appropriate or make changes as needed.
- Ongoing Relationship
Regular communication with clients helps ensure that action items are implemented and new developments are addressed. We also strive to share important updates/events/information through one-on-one communication and through our website, Digest, and social media outlets.
- Ad Hoc
Just as when your team’s defense forces a turnover and gives the offense another shot at scoring points, we too strive to help clients take advantage of opportunities that come their way. This is why we always like to be our clients’ first call when they find themselves facing financial decisions large and small and why we like to say: we’re good people to think with®.
- Financial Planning Policies
Financial Planning Policies are compact decision rules that combine clients’ goals and values with financial planning best practices. When done well, Financial Planning Policies can serve as a touchstone during turbulent times. They help us know what to do when it’s hard to know what to do.
- Investment Policies for Stocks
By favoring value stocks over growth stocks, small company stocks over large, and being globally diversified we focus on those parts of the market that are priced for higher returns. We also dollar-diversify by selecting only unhedged stock portfolios for our international allocations. Fully half of the stocks in any of our portfolios are in non-dollar-denominated assets. For more on the advantages of tilting toward small and value stocks, watch our video: How to Build and All-Weather Portfolio.
DEFENSE – “And while the offense scores points, the defense wins championships”
- Cash Reserves/Emergency Fund
Having three to six months worth of expenses in a cash reserve is a good buffer to tackle unexpected changes in income from a pay cut, leaving a job, minor medical costs, etc. We also target a full year’s worth of spending in cash for our retired clients.
- The Right Types and Amounts of Insurance
Proper coverage for health, life, disability, and long-term care insurance, as well as properly configured auto and homeowners coverage, will keep you and your family protected from a drastic loss of income and/or help mitigate the impact of unexpected health expenses or property damage.
- Appropriate Estate Arrangements
Documenting your healthcare wishes and how your estate should be settled in advance will increase the likelihood that your desires will be carried out and that your loved ones will be provided for.
- Safe-Spending Policies
Getting money into a portfolio is only half the solution, knowing how to get it out safely and sustainably in retirement is just as important. Our TheLiveBigWay® Safe-Spending System helps you both choose the right spending level for your portfolio and know when and how to make adjustments to ensure that you remain on a sustainable path. We discuss these in more detail in the Groundhog Day or YeBu® Investment Policy webinars.
- Bond Reserves
Our bond allocation is designed to be the “stable reserve” within the portfolio. We work along three major dimensions to minimize macroeconomic risks. First, we diversify bond holdings globally so that we aren’t subject to a single monetary/fiscal regime. Second, and unlike our approach to equities, we use portfolios that hedge away the exchange-rate risk in order to minimize short-term volatility. Finally, mindful of the fact that bonds with longer maturities are more sensitive to rising interest and inflation rates, we choose a mix of fund portfolios that is significantly skewed toward short and intermediate maturities. At this point in time, the average maturity of our bond allocation is less than one year (see “Investment Update: Going Short (Really Short!)”).
- Opportunistic Rebalancing
Our rebalancing policies help to reduce risk and increase returns by capturing periodic buy-low/sell-high opportunities. It is through a disciplined approach to rebalancing that we can capture the full benefits of diversification.
For more information on many of these topics, you may wish to explore the Yeske Buie Users Manual.