Heritage Trust Investment Process Starts with the Client

John McCollum, CFA, led the team that developed the investment process Heritage John McCollumTrust uses today. In the interview with John below, who now serves as Senior Vice President-Investments with Argent Financial Group, we find out the nuts and bolts behind the Heritage Trust process and how our clients benefit from it.

Why is it necessary to have an investment process?
All investment firms have philosophies that guide their approach to managing portfolios. These core beliefs underpin our entire investment process. The process is i05n place to guide the management of portfolios during normal times but importantly, can also serve to protect portfolios from the human emotions that come with times of euphoria and stress. The process serves as a constitution of sorts.

How was the process developed?
The investment process at Heritage Trust was developed over years of study, observation, and reflection and resulted in an approach to managing investment portfolios that struck the proper balance between the art and science of investing. We set out to develop an approach to portfolio construction that took the best parts of Modern Portfolio Theory, the well accepted idea that diversification reduces risk, and blended it with a system of in-house asset class and security valuation, a focus on the minimization of fees and taxes, a recognition that it is difficult to outperform in many asset classes and finally the use of a dedicated portfolio manager to interpret the individual risk and return needs for each account. The result is customized portfolios that mitigate risk while enhancing return.

What are the strengths of the process that continue to make it work for Heritage Trust today?
Like the Constitution, the policies that underlie the Heritage Trust investment process should stand the test of time. Market conditions change. Valuations change. Expectations for growth, inflation, and productivity change. One’s overall approach to investment management must be adaptable to changing market conditions. The approach remains the same, even if the outcomes or the people involved in the process change. I think it is that aspect of the Heritage Trust approach that makes it so valuable to Heritage clients. It does not rely on the opinions or forecasts of one person. It has been embedded in the organizational approach to managing investments.

How do Heritage Trust clients benefit from the process?
The values of Heritage Trust are rooted in our fiduciary duty to always act in the best interest of clients, and our investment process was developed around that. We understood that excessive, and in many cases unnecessary, fees harmed investor’s long-term returns. We also understood that unnecessary trading and frequent portfolio adjustments mostly detracts from long term results. As a result, the established investment process provides a customized portfolio based on the individual’s needs, time horizon and risk tolerance while minimizing fees for the best possible net return.

John, you’ve been involved with Heritage Trust since 2000 and you’re now a leader in our sister company Argent Financial. What is one aspect of Heritage Trust that has kept you involved?
I most appreciate the people and the way clients are valued at Heritage Trust. The team at Heritage genuinely puts client interests first. I think the Heritage Trust investment process is driven by the motivation to do the right thing for clients’ long-term investment performance even if it means not doing the popular thing.

Learn more about John’s new role with Argent Financial Group here.