The Process Of Investing

Like any complex project, having an approach to accomplishing it can reduce errors and greatly increase the odds of success.  Investing and financial planning are no different.  The process of working through an investment plan, tax plan, estate plan, asset protection plan, and charitable giving plan would be very difficult to accomplish if an advisor was not using a proven process.  The other advantage of a systematic process is that it allows you to understand how the pieces fit together and provides peace of mind that everything is being addressed.  With these things in place, implementing the plan becomes easier, as you are confident in what you are doing.

One of the challenges with finances is that as your situation becomes more complex, your professional team tends to grow.  Each professional has specific things in which they are responsible, and individually can do a great job.  However, to maximize your opportunities and avoid unforeseen risks, having a process in place that allows your team of professionals to discuss different planning options, can exponentially increase your odds of success.  Some of the biggest planning blunders can be avoided by some simple team communication before implementation.

First and foremost, your ongoing meetings with your advisor should provide reports that show you how you are doing compared to your overall financial goals.  Other tools that can be helpful is comparing your investment performance to the overall markets to ensure you are getting competitive returns.  Overall, good results are about realizing your long-term financial goals, and consistently managing your investments, taxes, estate planning, asset protection, and charitable giving.  If you feel like something is missing, your gut is usually right, and it may be worth talking with some other professionals and stress testing your plan.

One of the big advantages today is the major advancements that have been made with technology.  When it comes to tracking your financial plan and how you are doing, most qualified advisors will have two main tools available.  First, a comprehensive online portal that gives you a complete picture of your current financial status, and a second tool that analyzes your probability of success in reaching your most important financial goals.  The first tool will often track your long-term financial position over time, so you will be able to see how things have progressed over the years that you have worked with your advisor.  Some of these tools will allow you to track your income and spending and link all of your outside accounts, so that you have an automated platform that relieves you from manual tracking.

Depending on where your advisor sits on the Wealth Management Pyramid, they may or may not deal with these issues.  Generally speaking, as you move up the pyramid to a Wealth Manager or Virtual Family Office, these issues will be regularly discussed and managed.  Investment Advisors and Financial Advisors may work with you intermittently in these areas, but generally do not have a systematic process in place to manage them consistently over time.  As you grow your wealth, these interrelated decisions become more important and managing them can have a substantial impact on your planning and level of success.