By Ian Calvert on September 13, 2023
Financial planning is the first step in a comprehensive discovery phase at HighView Financial Group.
While many investment firms may eventually get the financial planning services once the assets have been secured, or simply don’t offer these services at all, we wonder how anyone can build a true goals-based, tailored portfolio without completing this work up front?
If there is a rush to talk about the portfolio structure before completing a financial plan, we suggest slowing the process down and taking a deeper look at what is being offered.
Is this a portfolio structure suited for me? Or just another “cookie cutter” portfolio for the masses?
We believe this is an insufficient way to start a relationship with a new client and at HighView have built a much more strategic upfront process putting the client’s interest and needs first.
Why we have adopted a Planning First Approach and are certainly willing to invest our time to complete this planning work first:
Deeper Discovery
By completing a financial plan first, it allows us to know and understand the client on a deeper level. The information needed to complete new account documents is simply not enough. If we enhance this phase and collect the essential information needed for the construction of a comprehensive financial plan, we will have a much deeper knowledge of our client and the purpose of their capital. In addition to the hard inputs, a full financial planning process should take a much deeper look into the client’s tolerance for risk and volatility in their portfolio. A portfolio that is not aligned with a client’s risk tolerance is often realized once it is too late.
Identifying the Client’s Unique Goals
Talking about specific goals is important but quantifying those goals will lead to a more sophisticated and personal level of financial planning and portfolio construction. How can one build a portfolio to achieve specific lifestyle, retirement, legacy, or philanthropic goals without identifying and quantifying the goals within a financial plan? Without completing this upfront financial assessment, we feel the portfolio construction would be totally blind to what the client is trying to achieve.
Tailored Portfolio Construction
Once the financial plan has been completed and the specific goals have been identified, we can then start the portfolio design phase. A personalized and tailored portfolio structure can then be created and implemented to achieve the known goals. This tailored portfolio construction leads a higher degree of certainty and predictability. One example is understanding the client’s specific withdrawal requirements in retirement, then building the portfolio to provide for the funding needs with targeted portfolio income/yield.
Tax efficient investing (Asset Location)
Taxation is a significant component to one’s total return on their portfolio. Asset allocation dictates what you own, but asset location determines where you own it in your portfolio – Non-reg, TFSA, RRSP, IPP. By completing the financial plan first, we can identify the current and future tax brackets of each clients. Once this information is known, the type of portfolio income and asset location is then adjusted to the family’s unique tax environment.
The financial planning first approach is crucial for the success of our clients and one of the core principles at Highview Financial Group. Taking the extra time and expertise to complete a comprehensive financial plan is the first step in our process, which we believe leads to a more comfortable and confident experience for our clients.
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