Despite a handful of volatile days in the third quarter, advisors that coached clients to stay the course, despite the noise, delivered value through exceptional portfolio performance.

The Federal Reserve’s target for short-term interest rates essentially sets the minimum level of borrowing costs in the United States. On September 18, the Fed reduced its interest rate target for the first time in more than four years. The 0.5 percentage point reduction made the Fed’s new target a range of 4.75–5.00%.

How should an investor allocate across active and passive investments? It is a challenging decision that involves many considerations. In the absence of a structured decision-making process, investors are left making arbitrary choices based on implicit assumptions.

From the Bible to Aesop’s Fables to modern portfolio theory (MPT), the concept of diversification—not putting all your eggs in one basket—as a means of reducing risk has been around for more than 3,000 years. But investors and the financial advice industry often focus solely on diversification across asset classes within a portfolio. They should broaden their perspective to include wealth management strategies—specifically, to reduce their exposure to the uncertainty of future taxes and planning horizons.