Today most of the public still see a Financial Planners job to be picking investments, portfolio management and managing money. In reality, this task is not even second to what a real planner should be doing. A real financial planners’ primary role is exactly what the title says, financial planning.
The truth is that a portfolio has no other rational function than as a servant of a plan. The highest and noblest function of an advisor is planning for their clients. Likewise, the widely accepted assumption is that the primary determinant of investment success is portfolio performance, but it’s not, investor behaviour is, and this is where a real financial planner adds immeasurable value.
The second most important function of a planner is as a behaviour modifier, helping clients refrain from making emotional big mistakes that will destroy their well thought out plan. This is not to say that one’s investment portfolio is not important, it is, but only to the extent that it funds your plan which consists of your own unique personal goals and dreams.
Simple examples of goals are a retirement income that you can’t outlive or funding your grandkids tertiary education. These goals will vary and be unique to every person or couple. Everyone’s plan will be different, so should the accompanying investment portfolio based on a client’s available resources available and time.
This misunderstanding by most is understandable as the financial services industry serves itself with the narrative it spreads through it’s marketing strategies, implying that “they” have the golden bullet when it comes to investing. Another truth that I will touch on another time is that long term real-life returns are more dependent on asset allocation than fund selection.
Make sure that you have a plan that drives your investment portfolio, not the other way around. I see so many situations where the client’s money is the “client” and not the individual/couple or their family. Trust me if you don’t have a real plan, it is probably because this part takes time, honest and sometimes tough conversation and needs an understanding of who YOU are.
Are you worth it?
Dirk Groeneveld, Certified Financial Planner
t. 083 261 9287
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Disclaimer:
This article is for information purposes only and does not constitute financial advice in any way or form. It is important to consult a financial planner to receive financial advice before acting on any information contained herein. Client Care and PWM and its directors, officers, and employees shall not be responsible and disclaim all liability for any loss, damage (whether direct, indirect, special or consequential) and/or expense of any nature whatsoever, which may be suffered as a result of, or which may be attributable, directly or indirectly, to the use of, or reliance upon any information contained in this article.
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