Your success depends on you.

Start with the end in mind

You cannot own what you have not identified. Whether your goals are quantitative or qualitative, the more specific you are, the brighter your future. Perhaps your objective is to live on $500,000 per year during retirement… Or to double the size of your family foundation and, in so doing, create a legacy of philanthropic giving among your heirs… Or preserve your family’s ownership of the company that took generations to build…

When it comes to defining your goals, there are no right or wrong answers. The only rule is that you put them in writing.

Create an escape plan for your money

It’s a mistake to grant one provider monopoly influence over your wealth management decisions. Investors, who are locked in advisory monopolies, grow increasingly dependent on their investment professionals and sometimes develop feelings of vulnerability that prevent them from owning their financial futures.

To counter this problem, we recommend that you open accounts with several firms. Multiple relationships enable you to:

• Say “no” to arbitrary fee increases. If you face a price hike, you have the infrastructure in place to take your business elsewhere.
• Reduce the impact of adviser bias in your decision-making. According to a research paper published by the University of Chicago, “An advisor’s own asset allocation strongly predicts the allocations chosen on clients’ behalf.” Perhaps it’s right for his or her financial objectives — and totally inappropriate for yours.
• Identify conflicts of interest. All financial advisers are salespeople, and all salespeople have conflicts of interest at some level. There’s nothing like competition to spotlight self-serving financial advice that is not your best interests.

There is another consideration about advisory monopolies, which is simply that no firm has a monopoly on good financial advice. Even if we serve as your primary adviser, we will identify competitors with whom you can explore a working relationship.

Break the sales cycle

Investment Policy Guidelines (IPGs) generally focus on asset allocation parameters. Which is fine. We use them to manage money and believe they are mission critical. But IPGs are generally silent on the input you want to make decisions about your wealth. You sign. Your investment professional signs. All parties file the paperwork, and the sales cycle is complete.

Talk about lost opportunity. IPGs are the perfect spot to define — in writing — what you need to make better financial decisions. When developing them with you, we both advise and solicit your input on relationship considerations that go beyond target allocations and high-low variances from them:

• Communication: At what percentage change in your investment value, do you expect notification from your financial adviser? Too much communication can be just as dangerous as too little.
• Permissible investments: It is one thing to set asset allocation targets, another to implement them. Why not cap the expense ratios on permissible investments, allowing for exceptions only with prior notification from an investment professional or your prior approval?
• Performance reviews: What are the must-discuss topics during performance reviews. Examples include YTD fees, performance versus indices, or progress metrics toward your specific objectives.

We offer the three preceding categories as thought starters, not a definitive list of must-have items that belong in your IPGs. By identifying exactly what you want, you control advisory relationships, break the sales cycle, and own your financial future.