By Adam Laird on August 30, 2023
In many ways, creating an investment portfolio is like building a custom home. At the outset you have a variety of options in front of you with sizes, amenities, and styles. The role of the architect is to design something that will be the right fit for you. Only then can trained professionals—carpenters, plumbers, and electricians—come in to build according to the architect’s specifications.
This isn’t to downplay the important role played by those professionals, but ultimately the process needs to start with design (the architecture) before anything can be implemented.
And yet, when it comes to investments, the opposite often takes place. Too often people buy a collection of investment products before they have even considered or put in place a prudently designed investment plan to meet their unique objectives and respect their risk tolerances.
Understanding the Importance of Goals-Based Portfolio Design
At the end of the day, your wealth is there to do one thing: fund future financial and lifestyle goals. The role of the adviser is to spend time understanding your unique objectives, risk tolerances, and preferences—designing a tailored investment portfolio with those factors top of mind.
This type of portfolio construction is generally referred to as goals-based design, an approach that focuses on understanding the true “purpose” of your wealth (whether that’s supporting a certain lifestyle, maintaining a family legacy, continuing a tradition of philanthropic giving, or something else) and recommending solutions that will help you make it sustainable and achieve your goals.
Relative vs. Goals-Based Benchmarking
It’s important to emphasize that goals shouldn’t be forgotten or cast aside once planning has been done and portfolios have been created. Rather, goals should continue to be a driving force and the benchmark by which you determine whether or not your portfolio has been successful.
Watch the Relative vs. Goals-Based Benchmarking Video:
Creating portfolios centered around your goals will help you and your family stay committed to your investment strategy and build long-term, sustainable wealth.
HighView is an experienced fiduciary portfolio management firm committed to investor transparency. We would be happy to discuss our goals-based investment approach with you and your professional advisors.
Watch our videos about a variety of asset management topics.
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