Investment Consulting

Cornerstone Management is uniquely qualified to provide investment consulting and administration services.  We believe the integration of these services adds significant value over time. As an investment management consultant we utilize a consulting-based approach to ensure that we fulfill our role as a co-fiduciary for our clients.

Our Investment Consulting Process

Our Investment Consulting Process

Review & Analysis

Our investment consulting process begins with a review and analysis of the existing investment policy.  This analysis may lead to revision or restatement, because we view the investment policy as an integral building block for the investment fiduciary.

Identify Objectives & Constraints

We revise an existing investment policy statement or draft a new investment policy statement to clearly outline the appropriate objectives and constraints affecting the various portfolios and should ultimately provide an asset allocation model for implementation.

Determine Required Asset Class Exposure

Cornerstone utilizes the objectives and constraints from the investment policy statement to develop the asset allocation model. Next, we select investment vehicles to facilitate the requisite asset classes exposures. Asset classes exposures may be facilitated through active or passive alternatives and is structurally agnostic.

Consider Cost & Client Philosophy

“All in” cost and client philosophy are among our important considerations when determining whether a mutual fund, separate account, ETF, or some other vehicle provides asset class exposure most efficiently.

Implementation

Our process is structured to allow for implementation through a traditional investment consulting or “outsourced chief investment officer” format. This means that we monitor and rebalance portfolios on an ongoing basis.

businessman working calculate data document graph chart report marketing research development  planning management strategy analysis financial accounting. Business office concept.

Portfolio Monitoring and Reporting

Following the implementation decision, comprehensive monitoring and reporting are required for proper fiduciary oversight.  Cornerstone’s portfolio management and rebalancing systems allow us to track every transaction inside our clients’ portfolios and to monitor policy adherence on a daily basis.  Further, our quarterly reporting is designed to allow Investment Committees and Boards to quickly ascertain if the portfolio is in compliance with policy guidelines, in adherence with UPMIFA, if fees are in line with market norms, and if spending parameters are being followed.  As an “outsourced chief investment officer,” Cornerstone leverages these tools to efficiently rebalance portfolios, monitor manager and portfolio performance, and facilitate distributions. 

businessman working calculate data document graph chart report marketing research development  planning management strategy analysis financial accounting. Business office concept.

Portfolio Monitoring and Reporting

Following the implementation decision, comprehensive monitoring and reporting are required for proper fiduciary oversight.  Cornerstone’s portfolio management and rebalancing systems allow us to track every transaction inside our clients’ portfolios and to monitor policy adherence on a daily basis.  Further, our quarterly reporting is designed to allow Investment Committees and Boards to quickly ascertain if the portfolio is in compliance with policy guidelines, in adherence with UPMIFA, if fees are in line with market norms, and if spending parameters are being followed.  As an “outsourced chief investment officer,” Cornerstone leverages these tools to efficiently rebalance portfolios, monitor manager and portfolio performance, and facilitate distributions. 

Our Investment Consulting Asset Class Selection

An important component of Cornerstone’s role as an investment consultant is asset class determination. Cornerstone utilizes the following processes to determine acceptable asset classes or to consider adding an additional class. When functioning as an Outsourced Chief Investment Officer (OCIO), Cornerstone will develop these assumptions and add asset classes to portfolios as necessary. Cornerstone utilizes multiple pieces of software to conduct such an analysis. 

  • Step 1: Select basic asset classes that may be acceptable.
  • Step 2: Utilize historic return series to develop standard deviation and correlation analysis.
  • Step 3: Run an unconstrained mean-variance optimization program using historical data.  As an alternative, a forward looking system may be used.
  • Step 4: Overlay constraints based on three criteria:
    1. Cornerstone’s historic experience with implemental and sustainable portfolios
    2. Forward-looking macroeconomic overview (subjective)
    3. Liquidity and liability demands
  • Step 5: Construct final target allocation model
  • Step 6: Utilize Monte Carlo simulation to stress test performance expectations and the successful management of the implied liability stream.
Analyst Employee Working With Spreadsheet On Computer
Analyst Employee Working With Spreadsheet On Computer

Our Investment Consulting Asset Class Selection

An important component of Cornerstone’s role as an investment consultant is asset class determination. Cornerstone utilizes the following processes to determine acceptable asset classes or to consider adding an additional class. When functioning as an Outsourced Chief Investment Officer (OCIO), Cornerstone will develop these assumptions and add asset classes to portfolios as necessary. Cornerstone utilizes multiple pieces of software to conduct such an analysis. 

  • Step 1: Select basic asset classes that may be acceptable.
  • Step 2: Utilize historic return series to develop standard deviation and correlation analysis.
  • Step 3: Run an unconstrained mean-variance optimization program using historical data.  As an alternative, a forward looking system may be used.
  • Step 4: Overlay constraints based on three criteria:
    1. Cornerstone’s historic experience with implemental and sustainable portfolios
    2. Forward-looking macroeconomic overview (subjective)
    3. Liquidity and liability demands
  • Step 5: Construct final target allocation model
  • Step 6: Utilize Monte Carlo simulation to stress test performance expectations and the successful management of the implied liability stream.
Businessman in dark office talking his mobile phone. Mixed media

Social Screening in Our Investment Consulting Process

As investment management consultant, Cornerstone must also determine if there are any social screening criteria that may affect portfolio implementation. With our experience as a Christian investment company serving faith-based organizations, we regularly construct socially screened portfolios. Cornerstone conducts Socially Responsible Investing/Biblically Responsible Investing for a number of its clients. Generally this takes place through a negative screen, which means that investments in companies of certain industries (e.g. alcohol, tobacco, firearms, pornography, abortion or defense) are avoided. 

When we implement Socially Responsible Investing for a client, we often do so through the use of separate account managers. We provide these managers with a list of industries and/or companies to avoid on a “best efforts” basis. However, there are a growing number of Christian investment companies that offer faith-based screening in a mutual fund format.  Often these screened funds may be utilized in place of a separately managed account, allowing attractive screened strategies for smaller portfolios. 

In a traditional investment consulting format, Cornerstone will work with the client to select an appropriate Christian investment company offering implementation alternatives which meet the organization's objectives. In our Outsourced Chief Investment Officer (OCIO) format, such decisions rest with Cornerstone’s investment committee.

Businessman in dark office talking his mobile phone. Mixed media

Social Screening in Our Investment Consulting Process

As investment management consultant, Cornerstone must also determine if there are any social screening criteria that may affect portfolio implementation. With our experience as a Christian investment company serving faith-based organizations, we regularly construct socially screened portfolios. Cornerstone conducts Socially Responsible Investing/Biblically Responsible Investing for a number of its clients. Generally this takes place through a negative screen, which means that investments in companies of certain industries (e.g. alcohol, tobacco, firearms, pornography, abortion or defense) are avoided. 

When we implement Socially Responsible Investing for a client, we often do so through the use of separate account managers. We provide these managers with a list of industries and/or companies to avoid on a “best efforts” basis. However, there are a growing number of Christian investment companies that offer faith-based screening in a mutual fund format.  Often these screened funds may be utilized in place of a separately managed account, allowing attractive screened strategies for smaller portfolios. 

In a traditional investment consulting format, Cornerstone will work with the client to select an appropriate Christian investment company offering implementation alternatives which meet the organization's objectives. In our Outsourced Chief Investment Officer (OCIO) format, such decisions rest with Cornerstone’s investment committee.

Whatever your financial need, Cornerstone Management connects you with a team of professionals who will help your organization grow and thrive.