“Clients often make investment decisions at inopportune moments, increasing or reducing risk in ways that hinder their long-term financial goals,” said Corbett Road Wealth Management President Matthew Gaffey. “At its core, tactical management provides the advantage of reducing emotional decision making and panic during the market environments that clients fear the most.”
Corbett Road, a McLean, Virginia-based RIA founded in 2002, emphasizes tactical asset management, with a view to clients’ evolving risk profiles.
WSR recently caught up with Gaffey to discuss tactical portfolio management in today’s ever-changing financial landscape.
WSR: Do most prospective clients you speak to understand the difference between portfolio construction and ongoing tactical portfolio management?
Gaffey: Most prospective clients are not initially aware of the differences and nuances between the two, but know they are looking for something different than the traditional asset allocation, buy-and-hold approach taken by most other advisory firms.
They often have their own ideas as to what “tactical” means, but when they see how we manage risk within the strategies and our ability to tailor the overall approach to their individual needs, they tend to appreciate our process. Many of them find it refreshing that our firm views the market and wealth management through a different lens.
WSR: Why do many independent RIAs claim investment management as a core competency, but don’t offer tactical investing in addition to portfolio management?
Gaffey: Tactical asset management requires significant time and resources, which is why many firms avoid it. Keeping clients in a diversified, asset allocation approach makes it significantly easier for the average advisor to scale their services. While that approach alone can be effective over a significantly longer time horizon, it requires investors to maintain a very high level of discipline throughout their lifetime, regardless of market conditions.
Our experience has shown us that approach is the equivalent of giving someone a fitness plan that allows for zero “cheat” days.
Our experience has shown us that approach is the equivalent of giving someone a fitness plan that allows for zero “cheat” days. At best, it’s an unrealistic expectation. More often than not, when a client operates outside of that rigid approach on their own, it can have a significant impact on their portfolio and ability to fund the lifestyle they envisioned.
In contrast, our approach acknowledges that client behavior plays a crucial role in achieving success. We embrace this reality, integrating strategies that adapt to clients’ evolving needs. By blending active, passive and tactical strategies, we create well-rounded portfolios that aim to reduce volatility during market downturns, helping clients stay on track with their long-term investment plans.
WSR: Do you see tactical investing increasing in importance over the next 12-24 months? If so, why?
Gaffey: Yes. Market volatility ebbs and flows, but it never disappears. Many of our clients have already achieved some level of financial success and seek to both protect and grow their wealth. Our approach creates a dynamic risk/reward framework tailored to their unique needs. Some regard tactical investing as being beneficial only in highly volatile markets or during significant downturns, but it is a vital component to clients’ portfolios, providing them with additional security and confidence, enabling them to stay more disciplined over time.
A rigid, one-size-fits-all approach to portfolio construction often falls short. Each client has unique objectives, behavioral tendencies and risk tolerances – factors that can evolve as market conditions shift. Successful investing requires balance, discipline and adaptability. In today’s dynamic markets, no single strategy can address every challenge. That’s why we integrate multiple proven investment approaches to build diversified, resilient portfolios.
Janeesa Hollingshead, Contributing Editor at Wealth Solutions Report, can be reached at editor@wealthsolutionsreport.com.
