Wealth management is often seen as synonymous with investing. That’s understandable: A significant part of our job is to oversee how your money is invested. But in a real sense, your investments are the last step in the process.
All too often, investors (particularly those without an advisor) put the cart before the horse and make investment decisions without considering their objectives and formulating a robust plan. It’s a recipe for disaster. But don’t worry, disaster can be avoided!
Why Clarifying Your Goals Comes Before Investments
When it comes to building lasting wealth, high-net-worth individuals and families need to start with the right foundation: a clear and comprehensive financial plan. Before making a single investment, it’s crucial to define the purpose of your wealth—what you want it to achieve during your lifetime and beyond.
At our firm, we don’t simply build investment portfolios for the next 5-10 years: Rather, we design financial plans that support a lifelong, multigenerational journey to wealth. That means:
- Ensuring an income that lasts a lifetime, so you never outlive your wealth
- Creating a significant and growing legacy for the people you care about
- Making a difference in the world through your charitable donations
There’s No One Size Fits All Plan
And while many of our clients share similar goals, the emphasis they place on various objectives can differ substantially. Some, for example, may require more income from their investments than others. Risk tolerances differ as well: How much volatility you can stomach plays a key role in the kind of portfolio we design for you. Long story short, there truly is no one size fits all financial plan.
Putting Your Plan into Action
Once we’ve settled on your goals, we put your plan into action. We typically do this by constructing a broadly diversified portfolio of equity (stocks) and fixed income (bonds) securities. We overwhelmingly buy the stocks and bonds of leading companies, those that have exhibited over many years a capacity to innovate, to grow, and to demonstrate financial strength in good times and bad.
Staying the Course Even When the Going Gets Tough
Discipline is what usually separates success from failure in any pursuit. It’s true of athletes, musicians, students—the list goes on. And it’s true of investors, as well.
An undisciplined investor abandons their financial plan (assuming they have one) when they the stock market falling precipitously. They usually sell near the bottom (the very worst time!) and so miss out on the rebound that almost always comes.
The disciplined investor does not waver from their plan. They know that volatility is a fact of investing life and has an upside: Lower prices mean cash can be put to work at more favourable valuations.
Unless your goals change, your plan shouldn’t change. And if your plan isn’t changing, the best course of action when the going gets tough is usually no action at all.