Goals-Based Investment Planning: More Than a One-Time Event

Build a diversified portfolio around your financial goals.

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Podcast Transcript

Host: Paige Green, Senior Director of Sales, Wells Fargo Private Bank

Guest: Dave Roda, CFA, Regional Chief Investment Officer, Wells Fargo Private Bank

[Paige]:

Hello, my name is Paige Green. I'm a Senior Director of Sales for Wells Fargo Private Bank. It's easy to become fixated on day-to-day moves in the financial markets. But is there a better way to invest? Joining me to discuss goals-based investment planning is Dave Roda, Regional Chief Investment Officer for Wells Fargo Private Bank. Dave, thanks for coming.

[Dave]:

Thanks, Paige. It's great to be here.

[Paige]:

Alright, Dave, let's start with the basics. What is goals-based investing?

[Dave]:

Paige, it's simply a strategy for building a diversified portfolio around an investor's goals, rather than creating a single “one-size-fits-all” portfolio strategy. By understanding what you want to use the money for, we can design an investment strategy for each goal that takes into account when you will need to draw on your assets and how much risk you can afford to take with your investments to potentially get the return you're seeking.  

[Paige]:

I get it. So this approach will create a multidimensional portfolio rather than one that's focused on a popular benchmark, such as the S&P 500 Index.

[Dave]:

That's right, Paige. While some high-net-worth investors have multiple financial goals that can be efficiently accommodated within a single investment portfolio, for many investors that's just not the case. Often, assets need to be segregated into different accounts or legal ownership vehicles to help optimize the investment design or tax efficiency, or to address beneficial ownership requirements.

[Paige]:

So really what you're saying is the focus is on the client need versus market performance.

[Dave]:

That's so true. In our view, the discovery process that we undertake with our clients as we review their needs is a little like a financial physical exam. And, like a physical exam you would have with your physician, your investment plan requires regular checkups in order to help keep the advisor updated on your vital financial factors and any changes in your personal circumstances that may affect your goals.

[Paige]:

But Dave, would this regular checkup be needed if the investor's goals haven't changed or they're only marginally different from the previous meeting? 

[Dave]:

Yes, these regular checkups are a really important element of goals-based investing. While a client's financial objectives may not shift, economies and markets are in a constant state of flux. Opportunities and risks across asset classes can rapidly shift based on changing economic variables, policy moves, valuations, and a host of other catalysts.

So keeping the portfolio calibrated to long-term return and risk targets typically requires a dynamic investment process that involves robust analysis and forecasting, thematic and tactical investment overlays, and a highly disciplined diversification and risk-management methodology. In our opinion, “set it and forget it” strategies cannot fully compensate for changing market factors.

[Paige]:

In your experience, would you say that this goals-based approach can help investors stay focused in volatile markets?

[Dave]:

Our experience strongly suggests that investors with detailed, updated financial plans are much more likely to remain committed to their investment programs over time, and therefore are more likely to achieve financial success in the long run.

[Paige]:

Versus potentially making investment decisions based on the current direction of the market.

[Dave]:

Exactly.

[Paige]:

All right Dave, as always, thanks for your perspective. And to our listeners, talk to your investment professional or contact us if you think it's time to schedule your financial physical. Thank you for joining us.

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The information and opinions in this report were prepared by Wells Fargo Private Bank. Information and opinions have been obtained or derived from information we consider reliable, but we cannot guarantee their accuracy or completeness. Opinions represent Wells Fargo Private Bank's opinion as of the date of this report and are for general information purposes only. Wells Fargo Private Bank does not undertake to advise you of any change in its opinions or the information contained in this report. Wells Fargo & Company affiliates may issue reports or have opinions that are inconsistent with, and reach different conclusions from, this report.

The strategies discussed in this report may be unsuitable for some clients depending on their specific objectives and financial position. Asset allocation and diversification do not assure or guarantee better performance and cannot eliminate the risk of investment losses.

This information is provided for educational and illustrative purposes only.

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