Robin Kuleck, an advisor with her own start-up firm, Kuleck Financial Planning, based in Emporium, Pa., believes there are three keys to successful investing: “Diversify, diversify, diversify,” she says.
To accomplish this for her clients, Kuleck relies on the 7Twelve portfolio method developed by Dr. Craig L. Israelsen, an executive-in-residence with the financial planning program at Utah Valley University in Orem, Utah, and a contributing writer for Financial Planning.
According to Israelson’s Web site, the 7Twelve balanced strategy differs from a traditional two-asset 60/40 balanced allocation in that it uses multiple asset classes to both enhance performance and reduce risk. The approach makes use of all seven asset classes commonly recommended for inclusion in a portfolio (large U.S. stocks, non-U.S. stocks from developed countries, real estate, natural resources, U.S. bonds; non-U.S. bonds and cash), using 12 separate mutual funds or exchange-traded products to completely represent the seven asset classes in the portfolio.
Having launched her business in October 2011, Kuleck became a member of the Garrett Planning Network, a nationwide network of independent, fee-only financial advisors. To ensure her clients’ portfolios are balanced, she applies Israelson’s 7Twelve principles using a templated spreadsheet created by fellow planner and Garrett’s manager of operations, Justin Nichols.
“When clients come to me with their portfolios, I use the spreadsheet to ensure they’re diversified,” Kuleck explains. “I check each mutual fund, cross checking their top ten holdings to make sure they’re not duplicating the same stocks within their funds.”
The model goes back to the traditional master 60/40 split of stocks and bonds. “But this gives you a broader guideline. The average client may think he’s diversified because he’s in five funds. But until you look at each of those funds, you can’t say you’re truly diversified,” Kuleck notes. “This tool allows me to populate the fields with different kinds of funds.
“When I became familiar with Israelson and his model, I thought this was something I could grab on to,” Kuleck says. “To me, using this method truly provides greater diversification for the client.”