Thinking Client-First: Goals-based Investing

By Loren Francis on September 16th, 2017


Goals-based investing is at the core of our investment philosophy, but historically this has not been the case for the majority of the investment industry.We are wealth architects whose sole purpose is to provide our clients with peace of mind by making their wealth sustainable. Goals-based investing is at the core of our investment philosophy, but historically this has not been the case for the majority of the investment industry.

Instead, the investment industry and traditional asset management have been modelled on asset gathering and driving product sales, alongside measuring expected return versus market indices. This focus has steered away from client goals and risk tolerance, and has emphasized “how can we increase returns or consistently beat the market?” rather than “how can we achieve our investment goals with some degree of certainty?”

With new regulations in place and a growing shift in the investment industry, goals-based investing is becoming the new normal in investment management. Why? It addresses the holistic well-being of the family or foundation, directs transparent dialogues about ambitions, fears, and opportunities, defines the goals and priorities of clients, and focuses on risk management and portfolio behaviour.

Recognizing Goals-based Investing

An investment firm that fully embraces goals-based investing should present comprehensive investment policy statements to clients and abandon the asset management perspective of index benchmarking.

Goals-based investing recommends appropriately designed solutions to achieve goals, tracks progress towards those goals, and adjusts the portfolio as necessary. This places performance in the context of achieving goals as the measure of success. Portfolio construction and investment performance is discussed in light of investment goals and risk tolerance as opposed to market dynamics, allowing the focus to move away from a continuous analysis of benchmarks and asset returns, and toward the establishment of progress to real dialogue.

Ideally, goals-based investing comes down to understanding the “purpose” of the funds taking into consideration the levels of risk tolerance, the different investment horizons or liquidity constraints, and then focusing not on the gain or loss of the portfolio but on the probability of the portfolio to meet the financial and investment goals.

As author Ashvin B. Chhabra states in The Aspirational Investor, “If the markets don’t really care about you, as they surely do not, then why should you spend all your time and effort trying to beat them?”

At HighView, we take the time to listen and get to know our clients so we can understand their needs, goals, and tolerance to risk. This insight, combined with our intelligent research, allows us to build a unique goals-based solution for each family or foundation.

HighView is committed to a client-first culture, and our values include integrity, caring, excellence, respect, and teamwork. We would be happy to discuss our goals-based investment approach with you and your professional advisors.

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