Investments are a key part of virtually every Financial Plan.
We believe there are appropriate Investments for every Time Horizon (the time between when the funds are set aside and when they will be needed again). Through our Financial Planning process we determine the time horizons involved in reaching the many goals for our clients.
We create clear, concise, and measurable Investment Policies, identifying specific ranges of funds to be held in specific Asset Classes.
Almost every “Advisor” uses a “Risk Tolerance Questionnaire”. For the most part we believe they are more often misused than used correctly.
Too often they are used to determine which investment a client will have the least sales resistance to. Too often it’s: Fill out a risk tolerance questionnaire that identifies you as a “conservative” investor and voila’ here is a “conservative” investment that we can sell you today and on your way you will be. “Hey, it’s what you told us you wanted.”
We take a different approach. We believe our clients come to us to find out what they need, not what some questionnaire determines is “suitable” for them.
Suppose at a visit to a doctor you were told that you had a serious illness that required surgery in order to save your life; a painful process and recovery.
And the Doctor asks “How do you feel about pain.” You reply “Don’t like it a bit.”
The Doctor replies “OK. No surgery for you.” Relieved, you ask, “so I will recover my health without it?’
And the Doctor’s reply comes “No. You are going to die from your illness. I already told you that. But you don’t like pain, so death it is.”
Sometimes our Investment Advice to a client is to be more heavily invested in stocks, for instance, than what they may be “comfortable” with. But it is a necessary step to get from Point A to Point B of their financial plan.
So when we use Risk Tolerance questionnaires it’s to determine the level of “pain” a recommended portfolio may cause and when “pain management” may be called for.
It’s okay, it’s actually natural, to have concerns/pains about investments. We understand that and work with our clients to eliminate the pain where we can or management it where it can’t.
What isn’t okay is to act on those concerns in a way that is harmful to your financial future. Yet that’s what most people without a caring, competent Independent Advisor do. Often the pain seems to go away when the Investments are being managed by a Trusted Advisor.
And if nothing else, that’s our role. Because selecting an Investment Advisor is a lot more than Asset Classes and Correlations and Betas and Alphas and “my investment managers are better than his investment managers”.
It really comes down to Trust.
It’s all about the journey
as long as the destination is secure.