Plan-Driven Investing
Symplany®
The client portfolio has one job: supporting the client’s plan.
Plans and portfolios belong together.
You work very hard to develop financial plans for your clients. Now consider this: the plans you prepare tell you exactly what the client portfolios should look like!
You tailor a financial plan to each client’s unique life situation. Each one has different plans, different balance sheets, different objectives. Each plan then calls for a different portfolio to support it.
Enter a new world where you customize every client’s portfolio to fit their unique financial plans with one aim in mind: to minimize the risk of each plan’s failure. Imagine effortlessly creating customized plan-driven portfolios for every one of your clients.
Today advisors practice any number of ways to construct and test portfolios, but the only truly relevant starting point in this process is your client’s financial plan. Decisions about the portfolio ultimately emerge from the plan. The portfolio understands the plan.
How you construct portfolios matters.
The foundational purpose of a portfolio should be to support the plan while minimizing the risk of its failure. All other purposes are secondary. With Plan-Driven Investing, the portfolio automatically derives directly from each year of the plan. Each year’s portfolio requires a different structure to effectively mitigate the two key risks to the portfolio.
In the short-term, a portfolio can lose a significant amount of its value due to market volatility. In the long-term, a portfolio will steadily lose value due to inflation.
Cash mitigates market volatility in the short-term while it loses value in the long term. Equities overcome inflation in the long-term while being volatile in the short-term. However, these two major investment classes are at odds with each other.
We’re all familiar with different models that are appropriate for different time horizons. One model with cash in the short-term, another model with equities in the long-term, and yet another model with a mixture in between. But a single-model approach, or even a multi-bucket approach, won’t suffice to support a plan year by year. If we abandon one-model thinking altogether, a whole new possibility opens before us.
To begin with, you have created a financial plan with specific annual goals. Now imagine each of these date-specific, dollar-specific goals and their timing produces a specific investment model that mitigates its specific risks. Mitigating both key risks year by year then minimizes the risk to the overall plan.
Advisors begin at many starting points when making asset allocation decisions. In order to support the plan, the only appropriate place to start constructing the portfolio is from the plan, supporting each of its individual years. Beyond significantly simplifying portfolio construction, portfolios built in this manner make all the difference in your practice and client relationships.
Simple, powerful, and compelling advising.
The most successful advisor focuses on what matters and what can be controlled. The advisor and client control the plan, and now the plan automatically controls the portfolio. And that matters! To begin with, because the portfolio is constructed directly from the plan, nothing else needs to be discussed about the makeup of the portfolio.
Gone are conversations about portfolio performance compared to some benchmark. The only relevant benchmark is the success of the plan, and the client can clearly see how their portfolio supports their plan.
Because it's the only thing that matters and can be controlled, the plan becomes the main focus of any client conversation. Meetings that once wandered from topic to topic become focused and actionable. Clients love talking about their plan because it encompasses their life aspirations and dreams. You as the advisor guide your client as they engage in their opportunities ahead, take ownership of their financial situation, and commit to making their plan a success. The conversation shifts in this way because the client has confidence in their portfolio supporting their plan.
Constructing a portfolio directly supporting a plan requires intelligently nuanced management and trading. Clients will readily see they cannot do this on their own. It becomes obvious that self-managed accounts won't suffice. Clients need the expertise and tools of the advisor to manage the portfolio to support their plan.
Under this framework, the client-advisor relationship becomes simple, powerful, and compelling. Clients understand their advisor's portfolio management role as they focus on their role in creating their plan and sticking to it.
Hopes, dreams, and aspirations of the client, as encompassed in their plan, begins and ends every client meeting.
A powerful connection… a world of difference.
So much good comes from this way of connecting the plan and its portfolio. Everything becomes simpler, more efficient, more on point, more actionable by the advisor, more helpful to the client, leading to greater client commitment and satisfaction. Everything good comes from connecting the portfolio to the plan.
We’d love to connect, learn more about you, and work together from there.