The Goals-Based Investing Advantage
Overview
One of the trends we’ve seen in response to the volatility of the markets in recent years has been for private investors to rethink how they define investment objectives through a goals-based lens. Families are actively articulating and measuring their investment profile in terms of their personal financial goals, rather than in terms of market benchmarks.
In this 2012 FOX Fall Forum session, Jean Brunel of Brunel Associates LLC and Stephen Campisi of U.S. Trust, Bank of America Private Wealth Management examined what goals-based investing means in practice.
Some key takeaways include:
- It is important to understand the challenges that go with this style of investing; it can integrate investment issues within a broad wealth management strategy.
- Goals-based investing naturally offers flexibility and change as/when needed
- Goals should be internally vs. externally managed and prioritized according to lifestyle and investment preferences.
- This is a holistic approach; goals, strategy, execution, evaluation and communication must all be in place for it to be successful.
- Risk should not be measured by traditional means (liquidity, lack of growth potential for successive losses, all about capital) but according to how it impacts the goals of the family.