Far too often, a family’s investment decisions are made on a loosely defined, ad hoc basis, with heavy influence from sell-side investment brokers and banks, personal relationships, and a high degree of investor subjectivity. Over time, a well-defined and well-disciplined investment process is far more likely to lead to a good result than a random, intuitive, or relationship-driven approach.
There are four aspects of a wealth management plan that will help ensure its success: clear goals; a sound framework; an integrated approach; and a resilient, adaptable, and disciplined process.
Any well-conceived investment process should include excellent strategy; high-quality investment oversight; fully informed decision making; and rigorous attention to results, costs, risks, and the need for specific decision-making on the buy, hold, trim, manage, or sell tactics for each investment.
The result should be an investment process that is fully aligned with the family and also transparent, phased, analytical, systematically skeptical, and, importantly, subject to the discipline of documentation.
Each step needs to be subjected to an ultimate decision test: What is best for the portfolio, given the family objectives and the strategic framework?
Answers will be subject to comprehensive analysis, a determination of fit with the portfolio strategy, and careful monitoring through postinvestment reporting tools.
Given the significant ...