I so love doing Wealth Forecasts with clients (as we did yesterday for one of our families).
They come in to our meeting with such dour expectations and worries and leave an hour or so later with a very satisfied and much happier outlook.
So why don't families make more time to get a plan?
It is oh so very important.
First and foremost we (High Rock Capital Management) are a portfolio management company (we are not financial or investment advisor's who collect commissions, see Rob Carrick in the Globe Investor section: "Bad Advisor Behaviour...") and we cannot begin to offer a holistic investment strategy unless we fully understand the goals and objectives, risk tolerance and time horizon issues of our clients.
The simple questionnaire on a typical (IIROC approved for Advisor's) application falls far short (in our humble opinion) of what we consider the appropriate amount of information necessary to build an investment strategy.
So we create a plan, or Wealth Forecast (administered by a licensed Certified Financial Planning professional, CFP) in order to get a full understanding of the family or individual that we are working with.
The more important part of this Wealth Forecast is the on-going monitoring of it over time. Every 6 months we sit back down to make sure that we are progressing toward our clients goals: where are we now? vs. where did we expect to be? and what, if any, changes need to be made.
Our client yesterday was a good $50,000 ahead of where their plan had forecasted they would be just 6 months ago. That is progress. I think we earned our fee.
Further and perhaps equally as important is that it allows our clients to create various "what if" scenario's: "If we increase our retirement travel spending, how does this impact our long- term net worth projection?" Or "how do home renovations impact our long-term net worth projection?", etc.
The great thing is, that once we have the base plan, we can easily make adjustments to determine the best possible outcomes for lifestyle goals and for legacy goals (I want to have $$ to leave to my children, grandchildren or favourite charity) or any changes to those goals.
Then, we can adopt a portfolio strategy and asset allocation that truly reflects each of these clients' particular situations and / or circumstances.
There is no room here for a "one strategy fits all" portfolio composition.
If your advisor just wants to stick you into a bunch of mutual funds or ETF's without giving you the rationale for how this is the best fit for your specific needs, just ask how she/he knows what is right for you. If you don't get a suitable answer, I would be happy to help.
If you want to see how your net worth projection looks out to the end of your time on this planet, we are always happy to help.
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Scott Tomenson,CIM Managing Partner, Chief Investment Strategist