When financial planners are asked at parties what they do for a living, many hesitate to be specific. Why? Because the inevitable follow-up questions relate to where they think the stock market, the dollar, interest rates or the economy are headed.
It’s a myth that dies hard—the idea that a financial planner is a market prophet with special powers for foreseeing the future. To be sure, some advisors position themselves as smart forecasters or market timers.
The best planners, however, will tell you that no one can predict the future.
We believe that a financial plan should not be shaped by market forecasts. Rather, it should be shaped according to the needs, goals, risk appetites and life circumstances of each individual client. In this sense, good financial planners are not experts in prophecy but in possibility.
We spend time with our clients to learn about them. We need to know not only about their assets, liabilities, income and living costs, but also about their aspirations and expectations. From there, goals are set for the short, medium and long term. We then connect those goals to a portfolio strategy that gives clients the best chance of both achieving their goals. A short-term market forecast isn’t required.
The key to earning that return is not market timing or stock selection, but diversification and discipline. The stock market will have more good years than bad, we know that. But there will be bad years, so a plan needs to accommodate those by including bonds and other defensive assets.
Finally, none of our plans are ever set in concrete and forgotten about. There are two reasons. First, markets are always changing. This can move clients’ portfolios beyond the bounds of their risk appetites. Second, our clients are always changing. They change careers, relationships, build families, move house, and face periodic challenges with their health and external circumstances. Plans need to be reassessed, portfolios rebalanced and goals reset, if necessary, to accommodate all of that.
The controllable stuff may not be as interesting as the big political or market story of the day. But it’s here where we, your planner, makes the real difference.
Get in touch with one of our Financial Advisers.
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