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THE EVOLUTION OF FINANCIAL INTELLIGENCE

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WORTH.COM

04VOLUME 19 | EDITION 01
(#"$& 
 Leading Wealth Advisor
 #& %%& ! !&
Todd Rustman, CFP®, CFA®, CLU®, CWPP,
Senior Wealth Manager
Besides the obvious, what is a good
way to diversify my funds?
By Todd Rustman
Understandably, people are reassess-
ing their investment strategies in
light of the recent market volatility.
A simple, but enhanced, approach we
take when looking at diversification* is
to spend a lot of time with our clients,
especially those in the distribution/
retirement stage of life, to determine
how to match goals with money. We
divide time into five-year increments
(call them “buckets” if you will) in
which each five-year bucket has a goal
that we have to be highly confident of
fulfilling, even before diversifying the
investment portfolio.
For the first five-year bucket, we
typically target a 2 to 3 percent return.
Why? So that we do not reach for risky
returns when we need to make sure that
the next five years’ worth of income is
met. We model a consistent monthly
income from this bucket, directing it
into the bank accounts of our clients
so they risk as little interruption as
possible. We use low-risk instruments
that most clients have heard of—CDs,
fixed annuities, short-term bonds,
T-bills, etc. To paraphrase a famous
quote, we are more concerned about
the return on your money than the
return of your money.
The remaining portion of the
client’s investable portfolio is further
segmented into four other five-year
buckets, with different targeted rates
of return, which guide the diversifica-
tion process and length of time in the
Securities are offered through NEXT Financial Group Inc., member FINRA/SIPC. GR Capital Asset
Management is not an affiliate of NEXT Financial Group.
*Diversification does not eliminate the risk of market losses.
investments. Furthermore, we work to
give our clients a raise every five years
by increasing their “take-home” pay by
an inflation-adjusted amount—approx-
imately 15 percent every five years, all
other things being equal.
We still believe in the benefits of
diversification, but the benefits are
enhanced when mitigating the
effects of longevity risk and/or tim-
ing mismatches. By first matching
the portfolio buckets with different
time frames and income needs, we can
reverse engineer a diversified portfolio
from a stronger footing. Higher-
reaching, more risky (yet higher-return
potential) investments are not even
considered until the income needs of
the next five years are met. In the
more time-distant buckets, we place
more equities, market alternatives,
private equity, private REITs, etc. By
covering the closest five years of income
we can be comfortable with more risk
and volatility, and, of course, higher
returns in future years.
As time moves along, each distant-
horizon bucket evolves into a lower-
return, more stable investment pool
from which to draw the next five
years of income (and a higher annual/
monthly amount).
Diversification is not simply adding
an array of investments to a portfolio
but rather reverse engineering a port-
folio and filling it with diverse invest-
ments to help you reach your goals.
WINE: AN ILLIQUID
L I Q U I D A LT E R N AT I V E
INVESTMENT
At the end of 2007, Ameri-
cans officially passed the
Italians in wine consump-
tion and became second to
the French as the top wine
consumers by volume. A
diversified portfolio can
include the wine industry by:
• Owning a winery or a
vineyard.
• Creating a portfolio
of physical wine bottles,
both investment grade and
potential new stars, as well
as keeping in-depth docu-
mentation on the bottles.
• Wine funds.
• Wine futures. In Bor-
deaux, futures have been
sold since the 1970s, and
now there are Burgundy,
California, Rhone, Italian
and Australian wine futures.
Wine should be looked
at as a three- to 10-year
investment with no divi-
dend. But bought right (and
sold right), it could reap big
dividends—if you do not
drink the potential profits!
Todd Rustman is a cofounder of
Levendi Winery in Napa, Calif.
These investments may have
a higher degree of risk to capital.
Value of these investments,
when redeemed, may be worth
more or less than their original
cost. Purchasers should care-
fully assess the risks associated
with an investment in these
types of assets.
  

How to reach Todd Rustman
I prefer face-to-face meetings with prospective clients.
Please feel free to call me at 800.805.PLAN (7526) or



“Arrange email me at trustman@gr-cam.com.

whatever
pieces come



your way.”
– Virginia Woolf

GR CAPITAL ASSET MANAGEMENT

WHAT’S ON M Y DESK…

Pictures of my family and four

computer screens—never enough
information!

I NEVER LEAVE HOM E WITHOUT. . .

Kindle, BlackBerry and a passion for

making an impact each day M Y HOBBIES ARE…

Learning, traveling, all sports, wine

and picking my battles

About Todd Rustman

Todd Rustman, president of the GRCAM team, has more than 16 years of experience in providing wealth
management and MFO services. He has CFP, CFA, CLU and CWPP certifications, as well as his pilot and
real estate licenses. He is a cofounder of several companies, sits on the board of Gen-Next and is the California
representative for the Asset Protection Society. He has been named a Top Wealth Advisor nationally with
Worth in 2007 and 2008 and was named a five-star wealth manager by Crescendo Business Services for
2009 and 2010.

Assets Under Management Compensation Method 44(5%$4(' ),9(' $/' +063-: )((4 &0..,44,0/4
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Minimum Fee for Initial Meeting Primary Custodian for Investor Assets (34+,/* $/' +$3-(4 !&+8$%
0/( 3(26,3('
Professional Services Provided -$//,/* ,/7(45.(/5 $'7,403: .0/(:
Minimum Net Worth Requirement .$/$*(.(/5 $/' $44(5 1305(&5,0/ 4(37,&(4 -,)( 4(55-(.(/54

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Website Email
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WORTH.COM F E B R U A R Y- M A R C H 2 0 1 0 093
 W

Todd Rustman, CFP®, CFA®, CLU®, CAPP, MMB, CWPP

GR Capital Asset Management (GRCAM)

660 Newport Center Drive
Suite 770
Newport Beach, CA 92660
Tel. 800.805.PLAN

Email: trustman@gr-cam.com
www.gr-cam.com

REPRINTED FROM

THE EVOLUTION OF FINANCIAL INTELLIGENCE

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