--- title: "How We Build Portfolios at Perissos: Our Process in Plain English" source: https://www.perissosprivatewealth.com/insights/portfolio-building-process-plain-english publisher: Perissos Private Wealth Management published: 2026-11-12T14:00:00+00:00 updated: 2026-11-06T19:10:48.759456+00:00 topics: Portfolio building process in plain English, family-first portfolio planning, tax-aware portfolio construction, concentration risk management, UHNW investment planning Oklahoma license: Educational content. Cite with attribution. Not personalized financial, tax, or legal advice. --- # How We Build Portfolios at Perissos: Our Process in Plain English ## Quick answer Perissos builds portfolios by starting with family obligations, spending needs, liquidity, taxes, concentration risk, and account structure before selecting investments. Risk is evaluated in household dollars, each holding must serve a clear purpose, and implementation considers taxes, withdrawal timing, and whether adaptive or more static exposure fits the plan. ## Key takeaways - The article’s stress-test example uses a $3 million portfolio and shows that separate 10%, 20%, and 30% declines equal losses of $300,000, $600,000, and $900,000 before any withdrawal. - After an assumed $120,000 withdrawal following those hypothetical declines, the remaining portfolio balances would be $2.58 million, $2.28 million, and $1.98 million. - The post says a lower-risk allocation may reduce exposure to some losses, but it may also reduce growth potential, so both tradeoffs should be discussed together. - Perissos describes Adaptive Allocation as one possible sleeve within a broader plan, using long-only liquid holdings, position limits, no leverage or short sales, and calendar-based rebalancing. - The article is dated November 12, 2026 and states that a household allocation and an account allocation do not need to be identical when taxes, ownership, and withdrawal restrictions differ. # How We Build Portfolios at Perissos: Our Process in Plain English *Connect the investment decisions to the family decisions* November 12, 2026 A portfolio begins with a family decision: what must this money make possible, and what could prevent that from happening? The securities come later. A retiree funding monthly spending, an executive holding employer shares and a business owner preparing for a sale can have similar net worth and very different investment needs. At Perissos, our planning frame connects investment management with the rest of the household's financial life. I want the reason for an allocation to be understandable before asking a family to live with its risks. This memo explains that decision framework and the role of our publicly described investment approach. It is not a model allocation or a promise that every account will hold the same investments. ## Start with the obligations The first planning questions concern the money that will leave the portfolio. What spending must be funded? Which expenses are flexible? What other income is available, and how dependable is it? A planned home purchase and an eventual legacy have different deadlines. Putting them into one undifferentiated return target can conceal the most important constraint. I would separate recurring needs from large one-time commitments and identify which assets can actually fund them. A household balance sheet may include a business, real estate, retirement accounts and securities with substantial unrealized gains. Total wealth alone does not establish ready access to cash. The investment discussion should make those distinctions explicit before choosing a growth allocation. The [SEC's asset-allocation guidance](https://www.investor.gov/introduction-investing/getting-started/asset-allocation) connects allocation with time horizon and risk tolerance. 1 In a planning conversation, I would distinguish willingness to tolerate losses from financial capacity to absorb them. Someone may feel comfortable taking risk while having little room to postpone a required withdrawal. Conversely, a financially resilient household may still need a simpler approach it can follow consistently. ## Translate risk into household dollars A percentage decline becomes easier to evaluate when expressed as dollars and compared with obligations. Figure 1 assumes a $3 million portfolio and separate immediate market declines of 10%, 20% and 30%. Those declines equal $300,000, $600,000 and $900,000. After an additional assumed $120,000 withdrawal, the remaining balances would be $2.58 million, $2.28 million and $1.98 million. The illustration is a planning stress test, not a prediction or a representation of any Perissos strategy. It assumes the withdrawal occurs after the decline and excludes taxes, fees, inflation, subsequent returns and other cash flows. There is no modeled probability attached to any scenario. The question is what each balance would mean for spending, work plans or other commitments. If the larger decline would force an unacceptable change, the response may involve more liquidity, a different allocation, less planned spending or a longer funding horizon. Choosing a lower-risk portfolio alone may not solve an underfunded goal. It can reduce the opportunity for growth as well as reduce exposure to some losses. Those tradeoffs should be discussed together rather than hidden inside an optimistic return assumption. Figure 1. Hypothetical remaining balances after separate declines and one withdrawal; not a strategy result or forecast. ## Give each allocation a clear role Once obligations and constraints are visible, holdings can be evaluated by the job they perform. Near-term funding needs call for attention to accessibility and stability. Longer-term goals can allow a different balance between growth and uncertainty. Inflation sensitivity, credit exposure and concentration also deserve explicit treatment. A holding should have a reason to be present beyond having performed well recently. [FINRA's diversification guidance](https://www.finra.org/investors/investing/investing-basics/asset-allocation-diversification) explains the importance of diversification both across and within asset categories. 2 In practice, counting account statements or investment names is not enough. Several holdings may depend on the same companies, industries or economic conditions. The review should look through the labels to the underlying exposure. Account type belongs in this discussion. Our memo on [building a tax-diversified retirement portfolio](https://www.perissosprivatewealth.com/insights/tax-diversified-retirement-portfolio) explains why the location of assets affects the choices available when spending begins. A household allocation and an account allocation need not be identical. The appropriate implementation depends on ownership, withdrawal restrictions and tax circumstances, coordinated with the CPA and attorney where necessary. ## Where adaptive investment management fits Our published investment overview describes Adaptive Allocation as one potential sleeve within a broader plan. It classifies current conditions, processes return inputs and uses that evidence to inform the sleeve's equity-market sensitivity. Cash equivalents can have a larger role in defensive conditions. This describes a decision process, not a forecast of the next market turn. 3 The disclosed implementation includes long-only liquid holdings, position limits, no leverage or short sales, and calendar-based rebalancing. A defensive posture may still lose money and may participate less in a subsequent advance. Signals can arrive late or reverse. 3 Those limitations are part of suitability, not details to consider only after performance disappoints. The right question is whether such a sleeve belongs in this household, in which accounts and at what size. Our discussion of [active drawdown management](https://www.perissosprivatewealth.com/insights/active-drawdown-management-retirement) connects that question to spending and reserves. An investor who wants continuous full equity exposure or expects protection from every loss may find the tradeoff unacceptable. ## Implementation can change the answer A target allocation describes a destination. Existing holdings determine the route. An appreciated position may create a choice between reducing concentration promptly and realizing gains gradually. An illiquid asset may limit how quickly the rest of the household can change exposure. New contributions, available cash and scheduled withdrawals can sometimes move an allocation toward its objective without unnecessary trading. I would document the reason for keeping a legacy holding as carefully as the reason for replacing it. Avoiding a tax bill is not automatically the best decision if it leaves the family exposed to a loss it cannot comfortably absorb. Equally, replacing everything immediately can create costs without improving the plan. This is where a multi-year perspective and coordination with other professionals become practical rather than abstract. Costs should be understandable in dollars as well as percentages. Review advisory and underlying investment expenses, transaction frictions and any constraints on accessing assets. When comparing approaches, the [SEC's performance-claims guidance](https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins-47) provides useful questions about fees, methodology and appropriate benchmarks. 4 A persuasive gross-return presentation is not a substitute for understanding the household's expected net experience. ## Decide how the portfolio will be governed A durable plan needs rules for review as well as rules for construction. The written investment policy should connect objectives, acceptable exposures, liquidity needs and authority to make changes. It should identify what prompts a planning review: a retirement date, business sale, major gift, new health expense or a material change in the family's obligations. Market-driven adjustments and life-driven changes are different decisions. A sleeve can change its risk budget without changing the family's long-term purpose. A major change in spending needs, however, may require revisiting the entire allocation even if markets are calm. Confusing those two levels can produce unnecessary changes or leave an outdated plan in place. Before committing to an approach, ask us to explain the role of each major allocation, the conditions under which it may disappoint, and the decisions available if the plan comes under pressure. Bring current statements, anticipated cash needs and the tax information needed to evaluate implementation. The objective is to leave that conversation with a portfolio whose purpose, tradeoffs and next decisions you can explain in your own words. All my best, Brandon VanLandingham, CFA, CMT, CFP Founder / CIO ## Related Reading [Section 1202 (QSBS): The HNW Founder's Best Tax Break](/insights/section-1202-qsbs-tax-exclusion-guide) [Kiddie Tax Rules: Funding Your Kids' Investment Accounts](/insights/kiddie-tax-rules-funding-kids-investment-accounts) [How to Use a Defined Benefit Plan as a Late-Career Tax Shield](/insights/defined-benefit-plan-late-career-tax-shield) ## Citations - SEC, Asset Allocation and Diversification (retrieved October 23, 2026). - FINRA, Asset Allocation and Diversification (retrieved October 23, 2026). - Perissos, Active Investment Management Built Around Drawdown Mitigation (retrieved October 23, 2026). - SEC, Investor Bulletin: Performance Claims (retrieved October 23, 2026). ## Important Disclosures This piece is educational. It is not legal, tax, or accounting advice and is not a recommendation to take or refrain from any specific action. Tax law is fact-specific and changes regularly. Please coordinate any decisions discussed here with your attorney, your CPA, and Perissos before acting. Perissos Private Wealth Management is a Registered Investment Adviser ("RIA"). Registration as an investment adviser does not imply a certain level of skill or training, and the content of this communication has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority. Perissos Private Wealth Management renders individualized investment advice to persons in a particular state only after complying with the state's regulatory requirements, or pursuant to an applicable state exemption or exclusion. All investments carry risk, and no investment strategy can guarantee a profit or protect from loss of capital. Past performance is not indicative of future results. The information contained in this newsletter is intended to provide general information about market themes. It is not intended to offer investment advice. Investment advice will only be given after a client engages our services by executing the appropriate investment services agreement. Information regarding investment products and services is given solely to provide education regarding our investment philosophy and our strategies. You should not rely on any information provided in making investment decisions. Market data, articles and other content in this material are based on generally available information and are believed to be reliable. Perissos Private Wealth Management does not guarantee the accuracy of the information contained in this material. Perissos Private Wealth Management will provide all prospective clients with a copy of our current Form ADV, Part 2A (Disclosure Brochure), Part 2B (Supplemental Brochures), and Part 3 (Client Relationship Summary) prior to commencing an advisory relationship. You can also view these documents at any time at adviserinfo.sec.gov or by contacting us requesting a copy. ## Frequently asked questions ### What comes first in the portfolio-building process? The process starts with household obligations, spending needs, liquidity, and timing rather than specific securities. Allocation choices come after those constraints are made clear. ### How does Perissos evaluate portfolio risk? Risk is translated into household dollars and compared with required withdrawals or commitments. A 10%, 20%, or 30% decline is evaluated by what it would mean for spending, work plans, or legacy goals. ### Why do taxes and account type matter in portfolio construction? Different account types have different withdrawal rules, tax effects, and ownership constraints. A household allocation may be appropriate overall even when each individual account is implemented differently. --- Source: [Perissos Private Wealth Management](https://www.perissosprivatewealth.com/insights/portfolio-building-process-plain-english) — fee-only fiduciary wealth management in Bethany, Oklahoma. 405.212.9690. This article is educational and is not personalized financial, tax, legal, or investment advice.