This is part two of the series, covering what happens just after the transfer process is complete.
Implement the Plan
Once your assets have transferred, I begin reviewing what has come over and prioritizing actions to bring you inline with your more ideal allocation, in a cost efficient manner.
Typically gross imbalances are targeted first, for example, if you are so far from your target allocation that I am concerned about the risk profile of your portfolio, starting there makes sense, while keeping cost basis front-of-mind to ensure that we are not creating an unplanned tax liability.
Using a disciplined approach, over the course of a few weeks to a few months, depending on the size of the portfolio, changes are made over time. Holdings that do not make sense for you, or that are too expensive for what they are doing are divested, and redeployed into holdings that do make sense for you, at a reasonable cost. I do not believe in trying to time the market on a large scale, therefore investment changes are made in increments over time, to mitigate the risk of making large moves on big days.
There are some instances where you will continue to hold “old” mutual funds or stocks. Commonly this is because of embedded gains that may create a tax problem for you. If the security fits the profile from a risk standpoint, we may decide to hold it until we are ready for the tax implication of divesting.
Once your portfolio is inline with the vision we created in your Investment Policy Statement, you will be notified the transition is complete. From that point on there should be a great deal less activity in your account, as we will move to a maintenance mode for the majority of the time.