A Blueprint for
WHAT’S ON YOUR BALANCE SHEET?
High net worth families typically have members with knowledge and input regarding financial matters. What they don’t have is a point person who’s accountable for executing the overall strategic direction. Crafting a properly diversified portfolio requires a partner with the time, skills, and resources to ensure the entire family is aligned, as well as bring order and structure to family financial affairs.
And no matter how well your portfolio performs, if the tax and estate issues are not addressed, the net result can be disappointing, and sometimes, disastrous. By focusing on all aspects of your balance sheet, Caprock is well positioned to protect and manage your wealth.
LOWERING RISK BY RAISING AWARENESS
Nobody can control the markets, but there are three things we can control: risk, fees and taxes. Risk means many things to many people. Whether it’s producing enough income, the loss of/or outliving capital, or not passing on wealth to future generations. It is our job to properly define risk for each family and mitigate it.
Believe it or not, managing fees and taxes are key to growing wealth. Most investors have no idea what they’re paying for investment advice or options, nor do they understand the impact of taxes on total return. Fortunately, we do. We work diligently to negotiate fees on behalf of our clients and model the after-tax return profile for any investment under consideration.
HOW WE MEASURE UP
One of the biggest differences between us and the financial services industry is we have a framework to monitor, measure, and evaluate progress towards key family goals. This is critical to success. Comparing portfolio performance to stated objectives is important because without a clearly articulated plan, a family has no relative way to evaluate performance.
We believe in creating a family’s own personal benchmark and we establish relativity using specific, detailed family objectives. For example, if a family knows that their portfolio needs to generate 5.3% in after-tax income, they can easily evaluate performance. Central to this framework is the ability to report on all assets, regardless of their location or complexity.
From our collective experience has evolved a core set of beliefs:
- The key to long-term wealth creation is compounding after-tax returns
- Protecting capital in down markets is as important as growing capital in up markets
- Since risk means many things to many people, it must be quantified
- Achieving success outside of public markets requires direct experience
- Managing taxes, fees, and expenses is critical to success
PORTFOLIOS MADE BY DESIGN
At Caprock, we build portfolios with intent and design. We develop a comprehensive understanding of both a family’s assets and their mission, and from this, we construct a framework with which to evaluate every decision. Against this backdrop, we continually monitor progress towards stated goals. The result of this approach is a portfolio by design rather than by default.
Our framework encompasses four distinct steps:
Identify a family’s needs/goals and review current state of affairs.
Outline a range of options addressing return targets, risks and key constraints.
Engage long-term asset allocation targets and transition plan.
Implement the plan.
Our thought process is geared around four distinct concepts:
Composition of Returns
Yield generation vs. capital appreciation.
Needs and sources across asset classes.
Needs, sources and timing.
Portfolio volatility vs. permanent loss of capital.
RETURN THE GOOD FOR A GOOD RETURN
We believe the way to address some of the world’s most intractable problems, such as climate change, is to invest for impact. Not only is it possible to use the capital markets to help the planet and/or champion a social cause, but clients can align portfolios with their values. As a founding B Corp, our commitment to impact investing is long-standing and principled. We’ve deployed approximately $1 billion in impact-oriented capital across every asset class. We also analyze ESG factors associated with client allocations and report on impact returns across their entire portfolio. Our clients’ success proves you don’t need to sacrifice financial returns to make a positive impact on the world.
CAPROCK IMPACT INVESTING TIMELINE
Co-founder Matthew Weatherley-White allocates capital with a socially responsible investing (SRI) focus and attends the only conference in the ecosystem at the time
OUR IMPACT ON IMPACT INVESTING
At Caprock, impact investing is not a product—it’s our passion. Years ago, when we started constructing impact portfolios, investment opportunities were inadequate. In response, we committed firm resources to field building. We seeded and anchored first time funds. We helped experienced asset managers structure aligned strategies. Today, as the impact investment marketplace matures, we’ve shown it is possible to generate market-rate returns with a thematic or geographic focus. We believe this expertise represents a significant advantage for both our firm and our clients.
EXPERIENCE THAT MATCHES YOUR EXPERIENCE
Caprock may have been founded as a family office, but we also support a growing number of impact-motivated foundations. Like the families we advise, foundations want an allocation that is not only in line with their values, but also advances their mission. Investment levels vary widely: some families commit 100% of their assets, while other foundations move more contemplatively. Whatever level of participation, we serve as a thought partner to one of the fastest growing and most exciting investor segments.