Fortigent™

Frequently Asked Questions (FAQs)

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Q: How does Fortigent build investment portfolios?

A:

We believe we identify and select excellent investment managers, but creating an optimal portfolio is not simply finding the best managers and mixing them together. How the portfolio is constructed—finding the right mix of investment managers based on their attributes relative to each other—is equally important.

Fortigent’s approach to investing is known as a core/satellite strategy. We find that certain asset classes, such as large cap core, are highly efficient. For those asset classes where it‘s difficult for active managers to add additional return without taking unacceptable risk, we use tax-effective index and index-like investment strategies such as index funds, tax-enhanced index managers, and ETFs. We then attempt to capture additional return through the use of active management in less efficient asset classes such as small cap value, emerging markets, and, when appropriate, alternative investments. We strongly believe our core/satellite strategy is a cost- and tax-efficient methodology for creating an effective investment portfolio.

Q: Where does Fortigent weigh in on the active vs. passive investment debate?

A:

There is a place for both active and passive investment accounts in portfolios. For example, a passive strategy may be appropriate when benchmark-relative investing is required or when there’s little advantage to be gained from an active approach. That’s certainly the case in those asset classes we believe to be efficient. For our taxable clients, we regularly recommend tax-enhanced index managers who provide index-like returns in specified asset classes while capturing tax losses that can be used to offset gains elsewhere in the portfolio. In other asset classes, we believe active management can add excess risk-adjusted return to the portfolio.

Q: Does Fortigent offer alternative investments?

A:

Fortigent was an early adopter of incorporating alternative investments into client portfolios, both as potential performance enhancers and as portfolio diversifiers. We strongly believe our expertise in this area differentiates our offering-and can help differentiate yours. Hedge funds and alternative investments are not for everyone. But when they are appropriate for your clients, we employ the following strategies:

·  Targeted Low Volatility Absolute Return
·  Market Neutral
·  Long/Short Equity
·  Global Macro
·  Relative Value
·  Merger and Convertible Arbitrage
·  CTAs
·  Private Equity
·  Private Real Estate
·  Tax-Advantaged Debt
·  Multi-Strategy Aggressive

By primarily employing funds of funds, multi-strategy funds, registered products, and "feeder funds" into single strategy managers, we offer clients a wide variety of access points into alternative investments.

Q: How are managers added to the investment platform?

A:

Once our analysts have completed their rigorous due diligence and are ready to recommend adding a manager to the platform, they must prepare a comprehensive quantitative and qualitative package for presentation to the Research Group, which acts as the initial review board. If the Research Group approves the recommendation, it is presented to a wider-based Investment Quality Assurance Committee, which consists of the senior management of the Research Group, as well as members of the executive management, client service, and compliance teams.

This committee not only reviews the performance analysis of the recommended manager, but it also reviews audited financial statements, reference checks, and background checks. The committee also verifies outside legal and accounting service providers, and it determines whether there is a match between the manager and the Fortigent investment platform. Only managers who successfully pass through this rigorous approval processes make it to our list of recommended managers.

Q: How are fees assessed?

A:

Fortigent charges an annual fixed fee and an incremental account charge. Both fees may vary based on the size and scope of the relationship, but we believe this structure allows you to grow your practice more profitably. As assets grow, the only additional cost to Fortigent is the nominal account charge. This gives you greater pricing leverage as you grow (or as your average account gets larger), especially when you compare our fee structure to those of providers that charge basis points off of AUM.

Q: What about taxes?

A:

The vast majority of our advisors' clients are taxable investors, so we try to optimize the tax-effectiveness of the portfolios we recommend by employing the following investment strategies:

·  We use tax-enhanced index managers and low-turnover managers
   in those asset classes we believe to be most efficient—where there
   is less opportunity to add value via active management.

·  By carefully considering asset location issues, we make sure your
   investment plan is integrated closely into your client's estate plan.
   This can help optimize the tax efficiency of the overall portfolio
   placing different types of investments in different entities to take
   advantage of statutory deferred or minimized tax opportunities.

·  We give you the tools to harvest losses within the portfolio while
   staying fully invested. These losses are then used to offset gains
   in other parts of the portfolio.

Q: How can Fortigent help with portfolio rebalancing?

A:

Fortigent offers portfolio rebalancing tools that allow you to systematically review a client’s portfolio to make sure it reflects the asset allocation policy on which you and your client agreed. Due to taxes and rebalancing costs, we recommend rebalancing only when necessary rather than at scheduled time periods such as quarterly or annually. The need for rebalancing may be triggered by significant over- or under-performance in specific asset classes, cash inflows to or outflows from the portfolio, or changes in a client’s objectives.

Typically, Fortigent does not recommend significant dynamic or tactical rebalancing because this may lead to an attempt to time the markets. Based on our analysis of the research, we do not believe that market timing pays off for the investor over the long term.

Q: Does Fortigent have an investment committee?

A:

Fortigent has an investment committee (IC) that meets at least four times per year. This committee comprises senior research and consulting professionals, members of the executive committee and, when appropriate, outside investment professionals. The mandate of the IC is to accomplish the following objectives:

·  Set the strategic investment philosophy for the firm
·  Evaluate new ideas, strategies, and methodologies
·  Discuss and debate changes to our strategy or
   manager line-up, as recommended by the research group
·  Serve as an ongoing oversight body to the process
   and administration of the research function within Fortigent

Q: What happens once we become a Fortigent partner?

A:

Fortigent will design a transition and training plan to get you up and running as quickly as possible. We have teams dedicated to seamlessly integrating your client information with our performance reporting platform. And our consulting and client service teams provide training, so you’ll know how to use our tools and get the most out of our offering.

Q: What are the Fortigent Forums? Is there an extra charge for participating?

A:

Fortigent Forums take place twice a year, when Fortigent gathers together our partners for two days filled with investment, industry, and practice management information.

Fortigent partners have the chance to meet and interview investment managers, hear about current trends in the industry, learn about marketing and practice management strategies, receive updates on the Fortigent service offering, and network with other Fortigent partners. Our advisory partners receive two complimentary invitations to each Forum.