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Investment Planning


Investment planning and management play a much larger role in financial security today than in our parents’ and grandparents’ days.  The shift from traditional pension plans to self-directed retirement vehicles like IRAs, 401k, 403b and similar plans means that today’s retirees are the baby boom generation is the first that will be primarily responsible for its own financial security in old age.  To meet that responsibility, retirees must have a prudent and thoughtful plan for the management of their retirement and other investments that will give them the best chance of sustaining their intended lifestyle through a likely lengthy retirement.  Today’s retirees must appreciate their real investment time horizon, their personal capacity and emotional tolerance for risk, and the environment in which they will be investing... hardly a small task and one that most people, by virtue of education and experience, are woefully unprepared to approach without professional help.
 
That’s where we come in.  Once we understand your overall financial goals and have developed strategies to achieve them, our attention turns to translating those financial strategies to investment strategies. 
 
Our basic planning work provides us with a pretty good understanding of your financial “capacity” for financial and investment risk.  But we take it one step further.  As part of our background work, we ask each client to participate in a risk tolerance evaluation administered by a third-party firm.  This helps us to ensure that we don’t inadvertently impose our risk tolerance on your investment plan.  Then we use the results of this evaluation as the core of an in-depth discussion about financial and investment risk.  From this process, we strive to come to the best understanding of your emotional risk tolerance that is possible at that time.  When your financial capacity for risk is combined with an assessment of your emotional risk tolerance, we are able to help you with the all important decision about your portfolio’s risk profile.
 
From there, we move on to developing an “Investment Policy Statement” (IPS) that will guide the day-to-day management of your portfolio, whether that role is performed by you, by us, or by a third party.  Your IPS will specify your asset allocation policy (how investments are to be distributed across various classes of investment assets) and how flexible that policy is to be, which types of investment vehicles are permitted in the portfolio, how often and under what circumstances the portfolio is to be rebalanced, how performance is to be measured and against which performance benchmarks, what kind of reports are to be prepared and how often, and who is to be responsible for which tasks to be performed in the investment process, and how often the IPS itself is to be reviewed.  Your IPS is a powerful document.  It is the “rule book” for the portfolio and, at the same time, your “owner’s manual.”  For people who justifiably wish to delegate day-to-day portfolio management to others, the design of the IPS is their opportunity to exert control over their portfolios without having to devote significant time on an ongoing basis.  Your IPS… it’s a good thing.


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