- Understand and document your goals and objectives.
- Gather and analyze available data.
- Reach consensus on a comprehensive wealth management strategy.
- Agree on associated investment and risk management plans.
- Research and recommend appropriate investments and implement investment plans.
- Monitor, communicate and refine.
Discussing and documenting life, wealth and investment goals are necessary to develop specific, actionable and achievable strategies and plans for effective life-long wealth, risk and investment management. The associated dialogue, and information and data exchange, must be comprehensive – including life goals, immediate and future needs, immediate and future wants, investment objectives, investment time horizons, risk tolerances, and pertinent background and experiences. Common discussion topics include educational expenses, desired retirement timing and lifestyle, current and future domicile(s), travel plans, current and testamentary or legacy charitable desires, business transition planning, wealth transition, family or other gifting, and planned expenditures or revenue for or from property, businesses, weddings, etc.
An equally comprehensive information and data exchange including current and expected changes to income, revenue and expenses; current and expected changes to cash flow needs; estate planning and wealth transfer legal documents; types and amounts of current asset accounts and holdings; tax considerations; pre- and post-retirement budgets; pension cash flows; and expected social security income. Gaps between desired and expected outcomes, if any, are analyzed to develop alternatives and assist in informed decision making. When and where possible the most critical factors to achieving desired outcomes are identified and prioritized.
Wealth provides opportunities that are best realized through and creates challenges that must be met through a deliberate, planned approach involving experts that have extensive knowledge of and devote a significant amount of time to following financial markets. Both risks and opportunities must be evaluated and managed over time to achieve optimum outcomes. Current, expected future and event or situation based tax impacts can significantly impact wealth accumulation and preservation. For instance, agreement on the optimum levels of taxable and qualified investment levels over time are critical to comprehensive wealth strategies. Agreement on the savings or accumulation period(s) and the drawdown or withdrawal period(s) by account type and account are also key factors to a wealth management strategy. Written strategies and plans assist in maintaining a common understanding of and focus on goals, allow for informed versus purely emotional decisions and force an awareness of new market threats and opportunities, as well as changes to pertinent laws and regulations.
A holistic investment plan that takes into account the proper diversification to achieve desired aggregate and account-by-account risk-to-reward balances will require investments in one or more common asset classes — cash and equivalents, investment grade taxable or municipal bonds, domestic and international stocks, emerging market securities, real estate, commodities and other investments. Participation in a given asset class may be via bank accounts, certificates of deposit (CDs), money market funds, mutual funds, individual securities in separately managed accounts (SMAs), exchange traded funds (ETFs), Real Estate Investment Trusts (REITs) and other investments suitable for the circumstance(s). Annuity, long-term care and life insurance policy reviews and recommendations may be conducted or made based on need.
Available investments will be evaluated and discretionary investments will be made by Pillar Wealth Management Co. or a manageable level of investments alternatives will be made available for participant directed platforms. Mutual funds, money managers, REITs and other alternatives are evaluated on parameters including style purity, longevity of investment teams, absolute returns, benchmark and peer group relative returns, alpha added, beta, and aggregate assets under management. Additions to and deletions from available investment alternatives will be made as appropriate based on these parameters.
Quarterly reports including beginning and ending account balances, period and year-to-date investment returns, and associated benchmark performance are available in a number of formats including electronic and printed. Progress toward goals, target versus actual diversification or asset class allocation, income desired versus income generated, and other parameters will be monitored to take corrective action as necessary.