Derek Kennedy, CFP®, is the president of Kennedy Wealth Management.
Education. Derek attended the University of Virginia, where he was an All-American swimmer and earned a B.A. in Philosophy.
Experience. Derek received his investment experience at the investment bank of Donaldson, Lufkin & Jenrette in New York City. As a Vice President of Institutional Equities and part of DLJ’s Investment Management Group, he worked with portfolio managers and research analysts of various national banks and mutual fund companies.
Certification. Derek is a Certified Financial Planner™, the requirements for which include: educational, experience, completion of a comprehensive exam, adherence to ethical standards, and completion of ongoing continuing education. The Certified Financial Planner Board of Standards Inc. (CFP Board) is a nonprofit professional regulatory organization founded in 1985 whose mission is to help people benefit from competent, professional and ethical financial planning. The CFP Board grants the CFP® Certification. This is the recognized standard of excellence for financial planners.
Professional Associations. Derek is a member, of the following organizations:
Motivation. Derek decided to open Kennedy Wealth Management, when he saw first-hand the challenges his parents faced when transitioning to retirement. They had been ignored by the investment industry for years and were then suddenly bombarded by numerous investment and insurance salespeople who came out of the woodwork once his father’s retirement assets would no longer be tied up with his employer. Derek felt like there had to be a better way, and that’s when he discovered Fee-Only financial planning and wealth management.
Investment Philosophy. At Kennedy Wealth Management, our primary investment goal is to maximize the long-term accumulation and sustainability of wealth by our clients. We seek to harness a set of investment management methods and procedures that put the profession’s “best practices” to work. Prime examples include the creation of client specific Investment Policy Statements to direct investment decisions and the use of customized rebalancing procedures to maintain target asset allocations. KWM tries never to lose sight of the big picture. In the spirit of great investors like Warren Buffett, Benjamin Graham, and John Bogle, we understand that investment expertise merely provides a set of analytical tools and strategies that must be handled judiciously in order to serve our clients’ needs. Every investment recommendation that we make is balanced by an equally detailed understanding and careful consideration of its potential risks. Kennedy Wealth Management creates an Investment Policy Statement (IPS) for each Wealth Management client, which acts as a foundation for the investment services that we provide. An IPS is a document historically used by fiduciaries in order to direct investment decisions. It clarifies the methods and procedures to be used in the management of the investment portfolio. As such, it provides a set of rules and parameters that lead to consistency and uniformity of action by the advisor. It also acts as a reference tool that facilitates clear communication with the client. We consider an Investment Policy Statement to be indispensable in both the creation and maintenance of the client’s investment portfolio. By using an IPS that outlines our clients’ individual requirements, we are able to respond efficiently and effectively to their changing financial situation by having a clear guide when making investment recommendations. The Investment Policy Statement includes:
- Investment objectives.
- Investment methodology.
- Risk tolerance classification and parameters.
- Target asset allocation.
- Historical performance of target asset allocation.
- Implementation techniques.
- Rules for rebalancing.
- Rules for evaluating and monitoring.
The hallmark of our investment style is a strong emphasis on the importance of asset allocation and portfolio diversification. We construct investment portfolios that utilize index funds, exchange traded funds, and other passively managed mutual funds almost exclusively. These securities tend to have lower style drift and much lower expenses than traditional mutual funds. They are extremely cost effective and tax efficient instruments for locking-in asset class tracking performance. We typically employ up to 15 asset classes in a mix that provides an allocation consistent with each client’s unique investment goals. Additionally, each asset allocation is based on a risk tolerance classification made after thorough analysis of a client’s need for risk, capacity for risk, and tolerance for volatility. These procedures provide an overall risk tolerance assessment that is far more accurate than simple “rule of thumb” methods. We believe that an imprecise asset allocation, based on a simplistic risk tolerance evaluation, may be the most common and costly mistake made by individual investors. It is our belief that properly designed and consistently maintained asset allocation is generally the most powerful determinant of investment portfolio performance. Lastly, we also utilize customized rebalancing procedures to maintain client investment portfolios. The importance and complexity of portfolio rebalancing is frequently overlooked or underestimated by individual investors, but is an element of investment management that is critical to the maintenance of a properly balanced investment portfolio. Deviations from an optimal asset allocation can carry significant consequences over the long haul.