My Value As An Advisor...

To know what clients want, you need to first know what they really value in life. You need to know about their life objectives and their tolerance for various types of investment risk. Then you build a financial plan to give them the highest probability of reaching those objectives while remaining true to their values. I call this enhancing their wealth.

Here's one definition of wealth from Webster's Dictionary: "the things that are most important to you." So when I find out what wealth means for a client, I want to help them create an abundance of whatever that is. Will it be a specific amount of money? No, in fact, I have never had a client who ranked money as number one. What's most important to people are things like their families, friends, health, career, or even spirituality.

When a client engages me as their primary financial advisor, my mandate is clear: Design a plan to take the client from where they are today to where they would like to be. The plan needs to give them the highest probability of reaching their objectives. The plan must also give them more time to focus on what matters most to them.

In addition, as an advisory team, each year we will:

1. Recommend saving strategies. We go over how much they should save (or when retired how much they can spend). If things are tight, we will help find money in their budget to save what they need to. They know that we prefer never to suggest to someone that they need to reduce their lifestyle, unless they really must.

2. Control money management expenses. Performance we can't control, but expenses we can control. We'll never rebalance needlessly to trigger taxes, and that we may rebalance to soak up losses.

3. Reduce taxes. First we will look for deductions or credits. Next we'll look to incur minimal tax on the portfolio by adjusting type of income, as appropriate. Then we will look for any deferral opportunities, and lastly, look for any ways to have income taxed in the hands of the family member with the lowest possible income. It's amazing the many situations in which we can reduce taxes by thousands.

4. Anticipate cash flow requirements. We will make certain they have adequate liquidity to avoid liquidation at the wrong time.

5. Protect net worth. We will be certain that they are protected from an interruption of income as a result of disability or critical illness. It's important to make sure there are adequate funds to protect erosion of what they have accumulated.

6. Keep estate affairs organized. We will suggest any changes that need to be made as the life evolves.

It's quite easy to fall into the performance game... To be measured by ones ability to beat the uncertainties of the market at all times. Investment performance is obviously part of the financial planning equation, but it's the part that we least control. That isn't to say that this mitigates the need for us to use well-defined investment principles and processes, but lack of control of the markets is a constant... I ask myself: What is my value as an advisor worth? (Because I know clients will be asking the same question)