Investment Strategy vs Financial Guidance

It might not feel like it, but there’s never been a better time to be an investor. Trading is cheaper than ever, fund and ETF expenses are coming down and investing is now available to all, regardless of class. Information on stocks, historical returns and funds is available with a few mouse clicks.

It’s true that anyone can create a portfolio, asset allocation or investment strategy. It’s not hard to do given the online tools, calculators and overwhelming amount of information available. However, investment selection and asset allocation (i.e. investment strategy) is just one part of being a successful investor.

The second part is personalized financial guidance. Financial guidance is essential as goals, income, risk tolerance and family dynamics change numerous times during a person’s lifetime. A guide can help you stay disciplined when a theoretical portfolio meets real world challenges and the highs and lows of markets.

Long-term success for investors is a combination of a sound investment strategy and personalized financial guidance. Both are important but different parts of successful financial plan:

Investment strategy is about portfolio construction and risk management.
Financial guidance is creating a personalized and comprehensive financial plan.  

Investment strategy is about asset allocation, expected returns, risk tolerance and time horizons.
Financial guidance is about learning to make smart choices about using debt, setting up college funds, tax efficient investing and complete estate and insurance planning.

Investment strategy is about managing investments.
Financial guidance is about managing investor behavior.

Investment strategy is about measuring investment performance by comparing results to predetermined index benchmarks.
Financial guidance is about measuring your performance against your true benchmark — your goals.

Investment strategy is about building an asset allocation that can survive severe market disruptions.
Financial guidance is about creating a financial plan that can survive severe life disruptions.

Investment strategy involves growing your wealth so some day you can become wealthy.
Financial guidance involves helping you define what a wealthy life means to you.

We are all individuals which is why individual advice is so important. Working with a trusted advisor who understands and acknowledges your goals, risk appetite and investing personality is paramount to becoming a successful investor.

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