The effective management of goals based investment portfolios requires strong investment skills together with ample time and resources, but in return, rewards financial advice firms with satisfied clients and superior business outcomes.
The premise of goals based investing is to achieve a target return within a specified time frame to meet a client’s personal financial goals; these can range from long-term goals, such as feeling financially secure in retirement, to more near-term objectives, like purchasing a home or funding an overseas trip. The process hinges on the adviser helping their clients uncover meaningful and achievable goals by fully understanding how they deal with money and what they wish to attain in life. Each resultant goal has a distinct time horizon, risk tolerance and target return, which then informs the appropriate asset allocation.
However, investors using the typical set-and-forget strategic asset allocation method leaves them at the mercy of market dynamics that may or may not be in their favour, which means client goals may not be accomplished. Instead, goals based investing engages a flexible active asset allocation strategy that moves capital in and out of a range of uncorrelated assets and applies multiple strategies to produce sufficient returns, while minimising capital volatility across the full investment cycle.
This sounds great in theory, but can be difficult to achieve in practice due to the skills, time and resources that are needed to keep up to speed with ever-changing markets. This is particularly so as the most value is often found in niche markets and strategies where most investors lack expertise and that are not accessible for large funds; a prime example is merger arbitrage.
This is why most financial advisers that adopt goals based investing choose to outsource the investment function of their business to a dedicated investment manager, leaving them to focus on their core competencies, such as client relationships, the provision of contemporary technical advice on areas such as insurance and taxation as well as business development.
Dynamic Asset is a popular provider of true-to-label goals based investment portfolio services. Advisors have access to a range of outcome-oriented portfolios that can be blended to suit various client goals – from a shorter dated Cash Plus portfolio through to longer-term portfolios that aim to boost returns while still safeguarding against excessive market risk. These are managed by investment professionals that have a demonstrated multi-year positive performance history across uncorrelated returns.
Dynamic Asset utilises managed discretionary accounts, which tend to offer the most efficient, transparent and robust legal structure for managing client portfolios. They are relatively simple to administer and provide a scalable solution that allows advisors to tailor each client’s portfolio in line with their individual goals.
Find out how Dynamic Asset can help you manage goals based investment portfolios that result in satisfied clients and improve the efficiency and scale of your business.
