Wealth Management

It requires a great deal of boldness and a great deal of caution to make a great fortune, and when you have it, it requires ten times as much skill to keep it.” – Ralph Waldo Emerson.

Passively invested, actively managed relationships. This is our approach to investment management, which we feel differs greatly from the rest.

As Investment Advisor Representatives(IAR) of Synergy Investment Management, a dba of TFO-TDC, LLC, we spend a great deal of time with clients discussing the philosophy of our wealth management strategies. It is critical to understand the platform that we use and the principles that we follow. Again, we’ve partnered with who we believe are some of the industry’s brightest minds to deliver an exceptional mix of products and services.

Number of individual stocks and bonds

Number of different asset classes;

Countries represented across the globe


76% of equity funds underperformed their respective benchmarks over the past 5 years when measuring the 5-year period ending December 31, 2014. 2


The typical actively managed mutual fund underperforms a benchmark index fund by more than two percent per year. 1

Estate Planning

Estate planning works toward reducing one’s estate tax exposure, which typically is the highest tax one can be exposed to. At the end of the day, the goal is to preserve the client’s wealth for its intended purpose. In order to effectively manage one’s estate planning, Synergy collaborates with all of the necessary parties. This includes both Houston-based and National Estate Lawyers. These parties assist with the document creation and review. Miller Grossbard Advisors, LLP also plays a critical role with specific accounting and tax guidance. Depending on one’s circumstances, it is critical to be well versed on tech full gamut of mechanisms to deliver efficient planning, which can include:

  • Trusts (IDIT, GRAT, ILIT, CLAT, CRT, etc.)
  • Wills
  • Family Limited Partnerships
  • Annuities and other investment vehicles

– Principle 1: Don’t try to “outsmart the markets.” Benefit from them.

“Beating the markets” typically drives money managers so they try desperately to predict the future. Moving in and out of asset classes hoping to catch them before they swing in or out of favor and buying and selling specific stocks and bonds attempting to make their move before prices go up or down are often the results. The reality is that most managers do NOT consistently beat the markets. In fact:

  • The typical actively managed mutual fund underperforms a benchmark index fund by more than two percent per year. 1
  • 76% of equity funds underperformed their respective benchmarks over the past 5 years when measuring the 5-year period ending December 31, 2014. 2

Synergy Wealth Partners and its partners have evaluated decades of research from Nobel Laureates and leading academics. This research demonstrates that investment success is primarily the result of portfolio construction and the efficiency of capitalism itself.

We do not attempt to outsmart the markets by picking the right stocks or searching for the right active fund managers. Instead, we build diversified portfolios that offer investors consistent exposure to all markets, delivering an investment experience resulting in a more sophisticated, less expensive approach to benefit from the built-in efficiencies of the markets.

– Principle 2: Redefine diversification.

Despite markets being inherently efficient, you cannot predict their movements. So if you want to consistently benefit from them, you need to be invested across all of them, all of the time. That way, when one market segment goes up, you’ll be there to reap the gains and conversely when another segment goes down, you’ll never be overly exposed to its losses.

We take diversification further.

We do not believe that you achieve optimal diversification with hundreds of stocks but instead with thousands of them. We do not just focus across the U.S. market, but across the world. This takes the emotion out of investing and puts the most advanced academic research into practice. Our portfolios diversify across:

  • More than 15 different asset classes;
  • More than 10,000 individual stocks and bonds; and
  • 40 countries across the globe.

The best way to lower the overall risk of a portfolio may be to add ‘riskier’ assets, which may seem counterintuitive. Remember, it is all about balance. Different types of investments react differently to the same market conditions. In fact, the more distinctive the investments, the less “correlated” their returns. In other words, the less likely they’ll move in the same direction at the same time.

– Principle 3: Determine the risks worth taking to potentially maximize rewards.

Diversifying across the spectrum of asset classes, around the world, and among thousands of securities is essential to reduce certain risks – such as picking a few “loser” stocks or being heavily exposed to one country’s faltering equity market.

In order to optimize returns, however, there are some risks that may be worth pursuing. To determine which risks may generate higher returns, we apply research from the world’s leading academics to guide how we weight our portfolios. So while past performance is no guarantee of future returns, we do take the following factors into consideration when engineering our portfolios.

Emphasis on stocks over bonds

Over time, stocks have delivered higher returns than fixed-income investments. 3

Emphasis on value stocks over growth stocks

Investments in “value stocks” – companies whose stock prices are relatively low – tend to be riskier investment than “growth stocks,” companies that appear poised for future gains. But since 1927 – 2014, large U.S. value stocks have had an annual return of 11.9%, while large U.S. growth stocks have averaged 9.5%. So we concentrate our equity allocation more heavily in value stocks. 4

Emphasis on small company stocks over large company stocks

Over time, small U.S. company stocks have also delivered higher returns than large U.S. company stocks. Since 1927 – 2014, small U.S. company stocks have delivered an annualized return of 11.8% while large U.S. company stocks have averaged 10.1%. 4

Synergy Investment Management knows the key to investing success is balance. We diversify across asset classes, but strategically weight that exposure toward investments that may offer the potential to optimize returns for fairly priced risk.

– Principle 4: Create a truly efficient portfolio.

At Synergy Investment Management, we don’t just design portfolios to be highly diversified, they must also be highly efficient. We go above and beyond to minimize every fraction of returns lost to income taxes, transaction costs and other inefficiencies. We further distinguish ourselves from other types of passive investing, including index investing by the following:

Providing access to institutional funds

We have the uncompromising objectivity to pick some of the best investments for our portfolios because we do not manage the underlying funds or get any compensation from the underlying fund managers. We use the highly diversified mutual funds which are not available directly to most individual investors. What makes these funds such sound building blocks is that they represent “pure” asset classes, meaning they stay invested within their stated category, not drifting into other areas in a misguided attempt to try to maximize returns.

True Diversifying

At Synergy Investment Management, we choose funds that diversify deeply within each asset class by purchasing thousands of stocks in that asset class. That helps you optimize the true benefits of diversification – to minimize risks and maximize returns.

Minimizing transaction costs and ongoing taxes

Our portfolios are managed on several measures of efficiency – both at the fund level and at the portfolio level. The funds employed focus on minimizing both trading costs and taxes. In addition, we utilize a unique selection of funds designed to avoid unnecessary transactions.

Consistency when maintaining allocations

Synergy Investment Management will regularly rebalance portfolios to maintain their stated mix of investments. We consistently stick to the stated allocation strategies, until there’s an overwhelming reason to change them. By doing this, you always know the composition of your portfolio. Our special relationship with Institutions and Financial Advisors is what sets us apart. It is a partnership based on a shared investment philosophy and there is no traditional retail access to the funds that we use.

Retirement Planning

Employers have a heightened interest in providing better retirement options these days. Retirement plans can serve to incentivize employees, reward certain key employees, and maximize owner’s contributions for retirement when structured properly. Synergy Investment Management, a dba of TFO-TDC, LLC seeks to deploy the best platforms for achieving the client’s specific and often unique objectives. We utilize the same wealth management platform offered to our wealth management clients so employers are able to offer the same exclusive access to money management to all levels of their company; this is something that has historically been reserved for the wealthy, sophisticated investor. Let us help review your existing plans or design a new one, whether it be:

  • Defined Benefit Plans
  • Defined Contribution Plans

1 Malkiel, Burton G. “Reflections on the Efficient Market Hypothesis: 30 Years Later” The Financial Review 40 (2005) I-9

Source: DFA. Beginning sample includes funds as of the beginning of the three-, five-, 10-, and 15-year periods ending December 31, 2014. The number of beginners is indicated below the period label. Non-survivors include funds that were either liquidated or merged. Outperformers (winners) are funds that survived and beat their respective benchmarks over the period. Past performance is no guarantee of future results. See Data appendix for more information. US-domiciled mutual fund data is from the CRSP Survivor-Bias-Free US Mutual Fund Database, provided by the Center for Research in Security Prices, University of Chicago.

3 Eugene Fama, on the faculty of the University of Chicago, is director of research for DFA. His research concludes that equities perform better than bonds, small-cap stocks better than large, and value stocks better than growth.  For more information please visit www.dfaus.com/philosophy/markets-work.html.

Source: Dimensional Fund Advisors.  Annualized returns for the period Jan. 1927 – Dec. 2014 from Fama/French U.S. Large Value and U.S. Large Value and U.S. Large Growth Indexes. Time periods shown are the longest periods for which data is available. Annualized compound returns (%) in US dollars. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results. Index returns are not representative of actual portfolios and do not reflect costs and fees associated with an actual investment. Actual returns may be lower. DFA’s “Index Descriptions” are available upon request.

Small-cap stocks may be subject to a higher degree of risk than more established companies’ securities. The illiquidity of the small-cap market may adversely affect the value of these securities.

Rebalancing portfolios may carry tax consequences and clients are encouraged to review changes with their financial advisors.