Today’s wealthy investors are usually very involved in their financial matters.  There is a tremendous amount of information available today on wealth management.  Russ Alan Prince published Wealth Management and defines it as “delivering a full range of investment and advanced planning services and products to affluent people.” Prince describes advanced planning for the wealthy in four areas including “Wealth Enhancement, Wealth Transfer, Asset Protection, and Charitable Giving.”

Wealth enhancement deals with taxation. What the rich do well is learn the strategies to minimize tax, such as use of dividend capital gains income, systematic withdrawal programs, assets swaps, trusts, tax shelters, and advanced strategies to defer taxation.

Wealth transfer is more than just writing out a will. Joint meetings with your advisor and lawyer accomplish more in less time.  It is a team approach the rich strive for.  Using planning strategies such as life insurance beneficiary designations, life insurance, and annuity contracts, spousal trusts, and segregated funds can help accomplish wealth transfer and peace of mind.

Asset protection is defined as protecting your capital and knowing safe strategies for minimizing risk of loss.  These losses can include market fluctuations as well as protection from creditors, ex-spouses, or family members.  The strategies can be directly related to the risk of a challenge from another party or a function of recognizing risk tolerance and appropriately matching your investments and portfolio asset allocation.

Charitable giving can be more than just giving money.  Several successful people in this great community donate their time and efforts to giving back. From a monetary point, the rich clearly want to give something back, sometimes with or without fanfare or prestige.  Did you know that you can easily set up your own individual or family foundation?  Strategies for charitable giving can include foundations, charitable tax planning, and charitable trusts.  The rich do more planning with their teams. They are like Lieutenant Columbo asking, “…just one more question.”

Can you imaging that some companies only have four to six investment models?  Attempting to use a conservative/balanced/moderate growth/aggressive platform is the same as saying that every consumer fits neatly into one of only five models. I think that is silly.

That is why you should consider goals-based retirement planning.  Each goal has a specific investment mix, so you may have several different portfolio needs—all with specific risk tolerances.  For example, say Fred and Wilma from Parksville are retired and want money for large trips or cruises.  They also need money available for the executor of their estate, and they want to put away some money for their grandchildren.  The rest is to use for income in their retirement. Some of their money is in non-registered investments outside RRSPs and some money is in RRSPs.

They have four or five specific goals.  All of these categories have specific investment risks and time horizons.  To put them all in one big investment model just doesn’t cut it.  Yet, many companies do it that way. Why?

Managed asset programs usually offer more than sixty investment portfolios, each featuring a very specific, highly detailed asset allocation model for specific needs and goals.  But which portfolios are right for you?  Each goal is customized to your unique needs.

For Fred and Wilma, let’s say the investment portfolio for the grandchildren is higher risk and has a 15-year time frame because of the age of the grandkids.  Then they can build the investment for the specific goal, different from their own retirement income objectives, which may have some short-term needs and longer-term targets depending on their ages.  There is no guarantee that a specific portfolio will meet that objective but having one portfolio for multiple objectives definitely brings more worry than goals-based retirement planning, which is to build a few specific portfolios for each goal or need.  Consider asking your investment professional to develop goals-based retirement planning for your specific needs.