Our Wealth Planning Process has 3 main components to achieving life-long financial success:
1. The Financial Plan
2. A Low-Fee Diversified Portfolio
3. The Investor's Mindset and Behaviour
The Financial Plan
Financial Planning is the foundation of achieving life-long financial success. We think it’s intuitive to most people that when you have a written plan you’re more likely to achieve your goals, than without having a plan. Thus, our mission in life is to help people make such a financial plan, and then guide them through the completion of that plan year after year.
Your plan covers two broad areas in your life:
1) It protects against the “financial risks” in your life*:
* Premature death
* Long-term disability due to injury or illness
* Prolonged debility at the end of one’s life
2) It defines and pursues the “financial goals” in your life:
* Your lifestyle today
* Business ownership (e.g. Need for credit)
* Retirement (e.g. the type of retirement lifestyle you want = how much money do you need each year?)
* Education for your kids/grandkids
* Legacies: Your heirs, your community, institutions important to you
A Low-Fee Diversified Portfolio
Your portfolio is the second major building block of life-long financial success, only after a written plan is done.
We consider the following with your portfolio:
* Asset Allocation (the mix of Stocks vs. Bonds & Cash)
* Diversification (geographically and sectors)
* Type of investing (Active investing or Index investing)
* Management Fees - MER's (must keep management fees as low as possible)
* Rebalancing your asset allocation (an ongoing process)
The Investor’s Mindset and Behaviour
When investing, it's critical to have a basic understanding of how capital markets work (i.e. its not a gambling casino.)
We educate our clients on how capital markets work including:
* The ongoing ups and downs of markets.
* The history of capital markets.
* Not getting “surprised” with invariable downturns in the market (e.g. Bear Markets.)
* Exercising patience and discipline – let the markets work for you over time.
* Time horizon: think of your lifetime… thinking in multi-generational time horizons is even better.
* Sell only when you need the money for cash flow and expenditures.
Over the balance of your lifetime, these are the common investor mistakes to avoid:
* Not staying diversified
* Giving in to Euphoria / Greed
* Giving in to Fear --> Panic --> Selling out
* Speculating on fads or the "investment du jour"
* Investing only for Yield/Dividends, instead of Total Return
A big part of an Investment Advisor’s job is to prevent investors from making these mistakes over the balance of your life.
What We Don't Do
It’s important to know what’s not a part of our Wealth Planning process, because we believe no one can do these things consistently over time:
* Predicting the short-term direction of the economy
* Timing the markets (when to get in, and when to get out.)
* Selection of individual stocks/bonds.
These things involve predicting short-term future events, which is a futile endeavor. There are literally hundreds of academic studies over the last 50 years that prove it does not make sense to try to do these things. Therefore, we don't attempt to do this. (Source: Dimensional Fund Advisors)
Instead, we invest in a diversified portfolio of thousands of companies from around the world at the lowest possible cost to capture the global market returns.
In Conclusion...
This is a simple process to achieving life-long financial success. But it's not easy-- especially when markets and your portfolio go down. That's why we believe most people need a caring and experienced investment advisory team to work together towards achieving financial success-- as you define it.
That’s pretty much how it works. What we can’t describe- what you may not be able to fully understand until you experience it- is the tremendous weight of concern that’s lifted from you when you know you have a first-rate plan in place, a low-fee diversified portfolio in place, and an experienced advisory team in your corner to achieve your goals.
This is what we do, and we hope you get a sense how much we love doing it for our clients.