What We Do

Pinney & Scofield offers combined services of financial planning and portfolio management.

Our clients are free to focus on the important things in their lives, because they have the confidence that their finances are in great shape. This confidence is born from the knowledge that there is a plan in place and that we are actively monitoring their finances. We look for and use the very best in academic theory and apply it to the financial planning and investment recommendations we make.

 

Financial Planning

We enable our clients to get a clear view of their finances and, if necessary, to develop savings patterns adequate to fund future goals, such as a college education for their children or living comfortably in retirement.

The financial plan allows us to understand the client’s objective and subjective ability to bear risk and is the single most important aspect of the portfolio allocation decision. The portfolio asset allocation – the percent of the portfolio in fixed income vs. stocks – is, to our mind, the basic portfolio decision.

This decision should be based on factors specific to each client and client’s portfolio. See our Principles of Financial Planning for the scope of our planning process.

We would also ask you to complete this questionnaire which will be used to build your financial plan.

 

Portfolio Management

Our portfolio management method, described in detail in Principles of Investing, is based on the idea that markets are efficient and that market activity cannot be predicted.

We establish fully diversified portfolios of index-style mutual funds. Accounts are located at Charles Schwab & Co., Inc. Pinney & Scofield, Inc. is granted a limited power of attorney.

We monitor accounts and place the trades necessary to rebalance the portfolio to restore allocations to the desired targets. In addition to Schwab’s monthly account statements, clients receive quarterly reports from us with a newsletter discussing accounts and current events. We also provide all the necessary tax information on the accounts.

 

Pinney & Scofield Principles of Financial Planning

There are many different ideas about what financial planning is and how to do it. Below are the principles we use at Pinney & Scofield to ensure a successful planning process that will put you on the path to achieving your goals. If this is what you are looking for, give us a call.

 
 

Planning, Not a Plan

We believe a financial plan is a tool, not a static document. Lives are dynamic and financial plans must be adjusted to reflect this. We wish to meet with our clients regularly, and to be available whenever needed, to help them make wise financial decisions. It is our goal to update your financial plan on a consistent basis, so we stay current with the changes in your life. Thick plans with fancy graphs usually end up in a drawer and are typically used only to market financial products. We offer a valuable alternative to this common practice.

 

Comprehensive, Fee-Only Financial Planning

Adds significant value. Decisions in one area of your life affect various areas of your finances. For instance, buying a second home affects your cash flow, it could affect your retirement date, your taxes and your insurance needs. For this reason, we take a comprehensive view with our financial plans, addressing:

  • Cash flow analysis

  • Risk management review (life, disability, long-term care, liability, etc.)

  • Estate planning techniques

  • Tax strategies

 
 

Maintaining the Highest Standard of Living

We believe people want to maintain the highest standard of living they can afford throughout their lives. Our plans tell you what you can afford to spend given your age, income, assets and committed expenses such as mortgage or college tuition. This method of planning allows you to:

  • Correct overspending now to avoid a significant reduction in your standard of living during retirement

  • Make more lifetime gifts to charity or family knowing you can afford it

  • Focus on important activities and people in your life knowing your consumption is appropriate given your resources

 

Coordinating With Your Other Financial Experts

It can be a daunting task to coordinate the essential pieces of a full financial team. While we are not tax preparers, insurance agents or attorneys, we are in a unique position to know our clients’ complete financial picture. As such, we can help you coordinate the members of your advisory team to help implement strategies. And, since we are fee-only, any advice we give is not influenced by commissions. Advice is simply offered in your best interest. We can provide:

  • Tax reports for your investment accounts directly to your tax preparer

  • Collaboration with your tax preparer on retirement plans and charitable giving to be sure your whole plan is considered, not just the tax ramifications

  • Information on assets to your estate planning attorney formatted the way they would like

  • Insurance coverage recommendations

 

Pinney & Scofield Principles of Investing

Many investors do not receive the returns they expect when taking risk. However, rather than questioning their investment methods they mistakenly blame the markets or Wall Street for this failure. We believe the Pinney & Scofield Principles of Investing, detailed below, allow investors to be suitably rewarded for taking market risk. Our clients have benefited from these beliefs for over 3 decades. If these principles make sense to you, or to learn more, please contact us.

 
 

Asset Allocation

Dividing the portfolio among cash, bonds and stock is the single most important factor in determining portfolio risk and return. The appropriate asset allocation should be determined from the facts of the investor’s own financial situation, not from a futile attempt to predict the near term profit potential of a particular asset class. Asset allocation, not market timing, is the key to successful investing.

 

The Holding Period on the Portfolio is the Primary Determinant of Proper Asset Allocation.

Money invested for a planned retirement in twenty years can be more aggressively invested than money needed for a college education coming up in three years. Having a longer time frame before the money is needed will allow the investor to aim for a higher rate of return by committing a greater percentage of the portfolio to stocks. Having time on your side will allow you to survive the inevitable and unpredictable declines in the stock market.

 
 

Stock Investing Should be Done Using Passive Investment Vehicles Such as Factor or Index Mutual Funds

They are designed to match the price action of a clearly defined risk factor or major market average. These funds not only have lower costs but also fewer taxable distributions than most actively managed mutual funds. The factor funds that our clients use are generally available only to institutional investors. These funds are protected from “hot money” flowing in and out of the funds, which can be damaging to long-term performance.

 

Diversification is the Key to Higher Risk-Adjusted Returns.

The stock side of the portfolio should be invested in a fully diversified portfolio of passively managed mutual funds. This provides a margin of safety in fluctuating markets. Some markets will be rising while others are falling. Attempting to own assets that all perform well at the same time – or attempting to be invested in stocks only during market upswings – ignores the benefits of diversification. The portfolios we manage are diversified along three major risk factors:

  • Location (U.S. and international)

  • Market capitalization (large and small companies)

  • Valuation (value and growth companies)

 
 

Make Portfolio Trading Decisions in Advance.

This allows our clients to deal with the great enemy of proper investing – emotion. The percent of the portfolio to be invested in stocks should be held constant through market fluctuations. This rule requires buying stock as markets fall and selling as they rise. Without a plan, many investors fluctuate between fear and greed. They buy as markets rise and sell as they fall. This amounts to buying high and selling low – not a good way to make money. To ensure our clients do the opposite, we monitor their portfolios and rebalance them as required.

 

Fees

 

Our clients pay three kinds of fees: fees to us, fees to a custodian to do transactions, and fees to a mutual fund company to manage the funds.