Disciplined Investment Approach

Our commitment to our doctor-clients is to provide the best solutions we can find to give you the best chance to achieve and maintain financial independence. We call it CCM - Critical Capital Mass.

As one of our long-time clients, you should be aware of our preferred investment management solution on which we are concentrating all of our new affluent clients, and which investment platform we believe proves most beneficial to you. This program, until recently available to only large institutions and ultra-wealthy families, provides us with all the elements of a disciplined, scientific, long-term process designed to provide enhanced long-term returns.

A principal technique is the application of Modern Portfolio Theory ("MPT") (see Note). We are able to apply institutional class investment tools and MPT on an individual basis.

CFO's Investment Philosophy is based upon Five Pillars.

Pillar #1 — Structured Asset Allocation
As an investor, nothing is as important to you as developing the proper asset allocation model. Over the long-term, the proper mix of stocks, bonds, and cash is the most important factor in reducing risk in your portfolio*. I would suggest that we re-profile you to make sure the asset allocation we have developed still accurately reflects your investment goals, time horizons and risk tolerances. Then, once we have established the proper mix, we would automatically rebalance your portfolio as needed to maintain that mix.

Pillar #2 — Efficient Portfolio Construction
By combining multiple asset classes and different investment styles within your portfolio, we would aim to lower the volatility of returns - that is, the range of different returns you could experience over time - in your portfolio.

Pillar #3 — Manager Selection
The program utilizes only institutionally-based money managers who focus on very specific types of securities. This assures us that the money managers choosing stocks and bonds on your behalf are always operating in a narrowly focused area of proven expertise.

Pillar #4 — Continuous Portfolio Monitoring
In addition to automatic rebalancing, the managers within the program are continually monitored to make sure that they are investing only in the specific types of securities they were hired for. Thus, your portfolio should always contain the style of securities it is supposed to have.

Pillar #5 — Tax Management
For your taxable assets, the tax bill paid to Uncle Sam has to be a concern. This program has different portfolios for taxable and tax-exempt investors. Using many tax-control strategies, the tax sensitive portfolios seek to reduce tax liability and generate enhanced after-tax returns.

The CFO Philosophy and Investment Process offers our clients:
1. Incorporation of Behavioral Finance at the security, manager and portfolio levels.
2. Creation and engineering new products to meets specific objectives.
3. Asset allocation aligned with risk and return objectives.
4. Risk managed through asset class structure.
5. Return enhancement through specialist fundamental and quantitative active management.
6. Access to premier investment techniques, asset classes and managers.
7. Continuous and dynamic monitoring.

The recent market turmoil has caused many investors to re-examine their investment philosophy and process in search of something more consistent and predictable. As your advisor, we have mounted the same kind of search on behalf of our clients. We believe that this integrated asset management program offers you a better investment solution.

These programs and techniques are implicit in your in implementation of your personal CFO Financial Treatment Plan for Doctors.

Summary — Simple Six Step Investment Management Process

In short summary, here is CFO’s simple six step investment management process.

1. Asset Allocation: CFO designs a customized portfolio for you based on your personal objectives, time horizon and risk tolerance.
   
   
2. Portfolio Structure: We diversify across asset classes and market sectors to maximize returns and moderate risk.
   
   
3. Tax Management: We help increase your investment returns by reducing taxes.
   
   
4. Specialist Managers: We take advantage of the expertise provided by money managers who specialize in specific areas of the market.
   
   
5. Portfolio Management: CFO monitors your portfolio on a regular basis to evaluate manager performance; we rebalance as necessary.
   
   
6. Consult regularly with Your CFO Financial Advisor. Review your progress with an objective professional, and discuss any changes with us in your objectives, time horizon or risk tolerance to maintain your strategic positioning.
   

CFO is an independent, boutique financial planning and investment advisory firm which specializes in the unique planning needs of doctors, is focused upon economic issues which confront doctors, and is characterized by a risk-averse planning philosophy. Just like many medical and dental professionals, CFO's advisors are specialists who implement and integrate balanced programs and services exclusively for Doctors.

###

Note — Modern Portfolio Theory is derived from the work of Professor Harry M. Markowitz (City University of New York), who published an essay entitled Portfolio Selection (1952) and a book, Portfolio Selection: Efficient Diversification (1959), and the work of Professor William F. Sharpe (Stanford University), who developed the Capital Asset Pricing Model (CAPM) and published an essay entitled Capital Asset Prices: A Theory of Market Equilibrium under Conditions of Risk (1964). In 1990, Professors Markowitz and Sharpe shared the Alfred Nobel Memorial Prize in Economic Sciences.