We have Identified 3 major goals that most of our clients and their families will want to address in life:
Our objective and value proposition is to address these and other goals our clients have and put plans and processes in place to achieve them.
The market does not matter, TARP does not matter, P/E ratios do not matter – why? The average age of retirement is approximately 62 and the average non-smoking couple will have someone live until 92…we need to plan for 30 years of income, not the next 3-6 months.
All you have to do is answer the question: How do you keep your retirement income growing quicker than the growth rate of costs?
If someone asks me the question:
"When is it time to get back into the market?" – my answer will be, "I never look at the market because it has nothing to do with what I do, creating your 30 year income plan".
No matter how much time I put into studying the market, I never knew what it would do in the short-term; however, I do know what it will do over 30 years. Therefore, I took the time I use to waste on trying to anticipate short-term moves and instead used that time to make sure I can project how much money you will have in year 17 of your 30 year retirement. “ You are starting to paint them a picture of what retirement can be like.” This is the biggest fault in our industry as people are looking for someone to help them imagine, not tell them what to do every 6 months.
This is not normal asset allocation that we all practice; this asset allocation is dictated by “The Plan” (point #1). What do you need to earn to sustain a rising income? RISING INCOME is the key because cost of living will certainly increase.
First, identify asset classes that don’t kept up with cost of living increases over 30 years: Cash and Bonds. Bonds are even called FIXED INCOME – therefore why would you expect them to provide RISING INCOME?
Over 30 years, stocks have never failed to rise above the rate of inflation. The words “Stocks”, “Equities”, and “Stock Market” all have negative connotations associated with capitals destruction…eliminate them from your vocabulary. Instead say, “We will own some of the great companies in Canada, the U.S., and the World”. That is your asset allocation decision.
The Point: Risk is not Principle, it is Purchasing Power! Over 30 years, the risk is not losing your money, it is outliving your money.
Disciplined Diversification (once you have the plan and asset allocation)
Our definition of Disciplined Diversification: You will never own enough of one thing to make a killing and you will never own enough of one thing to get killed by it. This is the classic Tortoise vs. the Hare – the hare never wins as this is a 30 year marathon, not a sprint. Anything you can make a killing in is getting ready to kill you ie: Technology in 1999.
Helping clients answer the only question that matters: "Do you know exactly how much money it will take for you to retire comfortably AND remain comfortably retired?"
99% of what we do is "behavior modification" and this is more important than all the other three points combined.
Download Value of Financial Advice - Jan 2014
Implementing a retirement, estate, and any other form of financial plan may consist of investing in mutual funds, insurance products (such as segregated funds) and other financial instruments. Prospective investors should always obtain a copy of the offering documents in respect of each investment product (such as prospectus, information statement or folder, insurance contract, etc.), and read it carefully, including discussion of any risk factors, fees, expenses, terms, conditions and restrictions. Consult your personal tax and legal advisor before investing.
HollisWealth®, a division of Industrial Alliance Securities Inc.