Albert* was just about to turn 40. When he looked back at the 15 years since he left graduate school to found his engineering startup, he was proud of how far he’d come. He was about to take his company public. And finally reap the rewards of taking the risks and putting in the hard work.

Albert’s business was on solid footing. His investments were another story. When he looked at his portfolio, he realized his collection of mutual funds wasn’t very diversified and that he lacked an effective allocation strategy. And his below-market-average returns showed it. He also thought he might be missing out on potential opportunities. Especially in global markets and alternatives. 

Albert was about to become a chief executive officer. What he needed now was a personal chief investment officer. So he got in touch with J.P. Morgan Private Bank.

We started by asking Albert about his investment goals. It was something he realized he had never really articulated. He wanted to retire early. And recently engaged, he realized he needed to make plans that included a family. 

We guided Albert through a step-by-step process that included making four decisions to help him be better positioned for his long-term objectives. 

The four investment decisions central to a customized portfolio.

Albert had been underperforming the overall market, mostly because of lack of effective diversification. Our benchmark-focused strategy would allow him to participate in the broad market in a way that could drive potential market-beating returns. An alternative would be a cash-based benchmark strategy focused on creating strong—and potentially less volatile—absolute returns through market cycles. 

Albert was comfortable with our recommendation for a market benchmark strategy. It fit in with his objectives, and he felt he could understand and evaluate it more easily. 

Our recommendation for a global portfolio made sense to Albert. His engineering business had taken him all over the world and given him a firsthand look at innovation and growth in smaller markets. 

Though a U.S.-focused portfolio would add a level of familiarity, he (and we) felt the exposure to opportunities in economies in different parts of the world—and with differing performance—would be an advantage over the long term.

As a businessman, Albert knew about the benefits of closely managing expenses. So he was biased toward lower-cost passive investment strategies. We recommended a blended strategy that gave him strategic exposure to active managers who offer the potential for outsize returns. And stronger long-term performance. Albert chose a portfolio with both. 

Because he didn’t know much about them, Albert had never invested in alternatives. We showed him how adding alternatives (like hedge funds) to a diversified portfolio can help lower overall volatility and provide a source of return that doesn’t typically follow the ups and downs of the stock market. 

Albert chose to include alternatives. Even though they are generally less liquid than other securities, we made the case that he had a long enough time horizon to take advantage of the benefits.

With these choices made, we developed a custom allocation aligned with Albert’s objectives and preferences. And we continue to check in with him to help make sure it stays on track. With his portfolio in place, Albert feels like his personal wealth is in good hands as he takes his company (and his life with his new bride) to the next level.

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