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Our Methods of Analysis for Portfolio Development

Overall, Burr Ridge Financial Planning is professionally concerned with the development of appropriately diversified portfolios by focusing attention on what is now considered by most professionals to be the primary contributor to investment results -- the efficient allocation of capital to selected asset classes. State-of-the-art tools and technologies are utilized in quantifying the client's expectations for return and attitude toward risk in order to help client's develop meaningful policies and objectives toward achievement of realistic goals. Modern Portfolio Theory Statistics and Efficient Frontier Analysis are utilized so that clients may be educated as to which combination of types and amounts of investments may help them achieve their goals with the most portfolio stability, given the constraints that their desires or circumstances may impose. Empirical research has proven that portfolio stability supports the opportunity for more predictably profitable returns.

To evaluate the advisability of individual prospective investments, Burr Ridge Financial Planning will evaluate the quality of the investment and the way in which the investment promotes the client's objectives in the most cost-effective manner. This analysis focuses on the track record of the sponsor, the current economics of the industry, and comparisons of the risk/reward characteristics for this type of asset generically, and the specific offered investment's relative position. For specific product recommendations, Burr Ridge Financial Planning will analyze the offering materials prepared by the issuer of the security or insurance product as well as third-party unbiased data and the supporting documentation prepared by the issuer's attorney, accountants, and/or other independent parties such as Thomson Financial, Morningstar, Value Line, Standard & Poor's, Moody's, A.M. Best Reports, and others. Once an analysis is conducted on the particular offerings suitability, it is then compared to other investment products offered by members of the industry in which the issuer participates. Burr Ridge Financial Planning will seek those opportunities with demonstrated above-average risk adjusted performance and with average or below-average total expenses when compared to their investment category peers as reported by Morningstar. This process identifies the specific investments more likely to succeed within each industry group or type.

Thus, investment policy and asset allocation recommendations from Burr Ridge Financial Planning take into consideraion all of the following:

Dynamic Asset Allocation -- Changes in investor circumstances may lead to the modification of policies, objectives and/or risk tolerances. Resulting changes are intended to maintain equilibrium between the client's policies and objectives and the asset allocation process.

Strategic Asset Allocation -- Historical data and Modern Portfolio Theory Statistics are analyzed to better understand how various combinations of assets have performed and are likely to perform over long periods of time. The goal is to achieve a given rate of return more predictably, and with less variance meanwhile, in order to enhance a clients probability of meeting their financial needs on schedule.

Tactical Asset Allocation -- Using periodic assumptions regarding the performance and characteristics of the assets and/or the economy, this approach attempts to improve portfolio performance by making "mid-course" changes in the long-term strategy based on near-term expectations when it is considered appropriate.


Past Performance is not indicative of future results. Diversification may reduce some risks of investing, but does not insure against market losses. Asset allocation won't guarantee a profit or ensure against a loss but may help to reduce volatility in your portfolio.