Managing For Financial Success
The Personal Finance Pyramid
It's important to plan your financial future. This pyramid offers a simple tool for prioritizing what’s most important. By defining your goals, addressing challenges, and exploring options, we’ll work together to create a personalized strategy designed for your success.
The Personal Finance Pyramid Outlines Three Important Concepts:
- Build a sound foundation to protect you from events you cannot control
- Grow your wealth through actions you can control: saving, investing, and paying down debt
- Consider riskier opportunities to grow your wealth faster than more conservative means
As your wealth grows, there is less need for protection, and these strategies can be re-purposed into estate planning and wealth transfer strategies.
Implementing Your Plan
1. Discovery
Discovery is the first step in building a meaningful and productive relationship between you and your financial advisor. It is where we define your goals and determine what matters most to you. The better I understand your goals, financial situation, and lifestyle preferences, the more effective our plan will be.
Discovery is an ongoing process, like every good relationship, the investment of time by both parties leads to better results.
2. Create a Plan
Once goals have been specified, it's time to create a plan, so you know you're heading in the right direction. For example, your plan will tell you whether you can retire comfortably, or what you need to ensure you can. Your goals can change as life events cause you to rethink what's important, or market conditions put you ahead or behind schedule.
Without a plan, your goals are just a wish.
3. Investment Policy Statement (IPS)
As you pass through the Discovery and Plan stages, the IPS becomes a blueprint for managing your portfolio. The IPS outlines your target return, risk tolerance, and asset allocation, as well as tax efficiency, liquidity needs, and any unique circumstances. The IPS helps you stay focused on your long-term goals even when markets stumble.
4. Portfolio Construction
Our portfolio design uses diversification and rebalancing to keep you on track toward your goals while managing risk. This means we avoid “putting all your eggs in one basket” and adjust investment allocations over time.
Recommended portfolios typically hold a combination of mutual funds, exchange traded funds (ETFs), individual stocks and bonds.
Since no firm has a monopoly on talent, my philosophy is to "hire" the best managers for each asset class. I use the term "hire" rather than "buy", because each manager fulfills a role in the overall design.
5. Progress Report and Review
Progress reviews are recommended every 6 to 12 months to evaluate your portfolio’s performance relative to your goals.
During our reviews, we'll reassess the economic and market outlook for the next period and discuss adjustments that may be needed to keep your portfolio positioned to support your plan.