Modern portfolio theory has worked wonders for investors, helping to balance risk and take personal investment to new heights. Yet the standard approach does not factor in one very important variable: your personal goals. Goal-based wealth planning takes a much more holistic approach to wealth management. A goal-based approach to investment can help you create a life, not just plan for a retirement.
Where a traditional approach may assign general milestones based on a person’s ability to handle risk, the common goal was usually a comfortable retirement. This is changing, as more and more investors value the process of getting to retirement over simply enjoying the retirement itself.
Goal based wealth planning takes a unique approach to personal finances. The process involves identifying your personal financial goals and creating a map of how to get you there. This includes estimating the costs and risks associated with those goals and creating a blend of investments that are most likely to get you to each one. The result is a more holistic and intuitive approach to wealth that incorporates individual needs and leaves room to adjust to life changes.
For the last few decades, the wealth planning industry has largely been focused on a blanket approach to finances; using a small number of different strategies that are supposed to fit every case. Unfortunately these programs can leave little room for the actual individual’s needs.
On the other hand, a goal-based wealth planning strategy starts with you. Your goals and needs are at the forefront of these plans, and it makes all the difference. For instance, a wealth plan for new parents may include plans for their children’s future education. Anyone interested in charitable works will want to factor these philanthropic ventures into their wealth plan.
The largest advantage of using a goal-based wealth planning is the ability to clearly define your personal financial goals and then work to achieve them.
Goal based wealth planning holds some other distinct advantages over traditional methods. These include creating a better picture of your family’s wealth, a more holistic approach to estate planning, and a better way to adjust for risk in the long run. A large part of the success of this plan is going to be based off of partnering yourself with the right financial advisor.
The role of an advisor in the goal-based wealth plan is also different. They play less of an authoritative role than in the traditional investment approach. Your advisor is more concerned with creating a lasting relationship than fitting your investment strategy into a neat box.
Your financial advisor will want to understand you and your family on a closer level to get the best picture of your financial goals. Their role is inclusive; they are an experienced voice who can show you how best to reach your unique goals. A true financial advisor will take a vested interest in your success, and will plan on being involved with your wealth plan for generations to come.
Goal-based wealth planning requires an understanding beyond basic portfolio theory. Working with a group that has the knowledge and experience in every aspect of the industry is a big indicator of the possible success of any wealth management plan.
At Generations wealth planning, our focus is always on the best future for you and your family. Our advisors have decades of experience in the industry, but we have our priorities straight. Rather than sign you up for a program and send you out the door, we work to create relationships lasting generations to come.
A true advisor is with you every step of the way, making sure you are on line with your goals, and offering adjustment advice to get you there as easily as possible. In the constant fluctuation that is the investment industry, this makes all the difference. Contact Generations Wealth Planning today to start a conversation about your family’s needs. Together, we can build a legacy to last generations.
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