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The New Wealth Management: The Financial Advisor's Guide to Managing and Investing Client Assets by Harold Evensky, Stephen M. Horan, Thomas R. Robinson, Roger Ibbotson

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CHAPTER 3

CLIENT GOALS AND CONSTRAINTS

Change is the investors’ only certainty.

—T. Rowe Price Jr.

Everything is client driven. The process begins with the formal establishment of the client relationship. Even at this early stage, the wealth manager must customize his or her approach to reflect the client’s unique needs, circumstances, and experience. This would include not only obvious factors, such as the client’s investment experience, but also significant personal issues, such as marital status and circumstances (e.g., recent divorce, impending retirement, and fiduciary considerations).

GOAL SETTING

Individuals, if they think about goals at all, tend to think of goals as very generalized. For example, a typical client, when asked about goals, might respond as follows: “Well, I really would like to be able to pay for my children’s education, retire, and enjoy my retirement.”

This rather simplistic response misses all of the major attributes necessary for an advisor to begin the planning process, namely the attributes of specificity and priority. Goals must be time and dollar specific and prioritized. The first step in the process of wealth management is for the client to define goals with specificity. It is the responsibility of the wealth manager to educate the client in this process.

Goal setting is an integral part of the wealth management process; it is, in fact, the foundation on which all subsequent work depends. The following discussion addresses in great detail the ...

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