ABOUT HERITAGE FINANCIAL ADVISORS

Heritage Financial Advisors is an independent advisory firm with over 64 years of combined financial experience. The core financial advisory group consists of Sasha Wright, Charlotte Sargeant, and Evonne Johnson. We pride ourselves on adhering to the highest level of ethical standards and believe in building a relationship which is founded upon trust by serving our clients with honest, unbiased, goal oriented financial advice. We serve individuals, families, closely held businesses and charitable foundations. We act as a fiduciary to you, our client. Our advisors have no proprietary products to sell. Instead, our interests are the same as those of our clients. This eliminates much of the conflicts of interest between our clients and ourselves as compared to commission based firms.

Investment Philosophy

Our investment philosophy follows the covenants of Modern Portfolio Theory, which uses different asset classes to increase overall portfolio diversification and reduce risk. Our philosophy follows the Prudent Investor Act, which requires advisor’s to act in the client’s best interests at all times. Portfolios are constructed based on models established by Dimensional Fund Advisors, a leader in structured and passive investing. Studies have consistently shown that passive asset management out-performs active management over time. Structured and passive management provides several advantages:

  • Low expense ratios or cost,
  • Low turnover, which reduces not only costs, but taxes as well,
  • Favorable returns from reliance on a broad range of each asset class,
  • Performance that usually exceeds that achieved by the majority of active managers over time,
  • Low cash positions, and the
  • Ability to consistently provide near market returns.

Our investment methodology relies on concepts developed by three U.S. economists, Merton Miller, William F. Sharpe and Harry Markowitz. Their work focused on the need for diversification, the relationship between portfolio risk and return and asset class investing, which earned them the Nobel Prize for Financial Economics in 1990. Their work, along with the work of others has led a new investment paradigm of market equilibrium.

One of the most important decisions for an investor is determining their asset allocation in a portfolio, i.e., the equity to fixed income ratio. The explicit allocation is created only after in-depth discussion with the client. Once the allocation is established, the building blocks of large-cap, mid-cap, small-cap, value and growth asset classes, both domestic and international, will be created and discussed with you on a regular basis. These allocations are monitored and discussed on a regular basis.

Once the allocation is determined, the portfolio is created using asset classes that have a low correlation to each other so they do not all move in the same direction or at the same intensity as the markets change. This is done to reduce the volatility of investment returns.

The following is an example as to why this is relevant: A typical investor’s portfolio may be comprised of 30 or 40 individual stocks or three or four mutual funds and the investor may assume their portfolio is diversified. In actuality, the portfolio may only contain two or three asset classes. Each year certain asset classes prove to be the best or worst place to invest. Because no one is certain which asset classes these will be, it’s important to own multiple (12-14) asset classes to reduce volatility in the portfolio. This is achieved by investing

Across asset classes: (“weighting” each asset class so that the portfolio risk is appropriate for the investor), and

Within asset classes: (including the securities of an asset class through a broad-based vehicle such as an index type fund).

It is generally accepted that successful investing does not require that an investor obtain the highest returns during market highs as long as he or she avoids the lowest returns of a down cycle. Our portfolios are designed to provide returns that meet the investors’ objectives while balancing risk.