Reaching Your Goals with Long-Term Portfolio Management

Every family’s situation is unique.

And if you’ve been at this for a while now, as we have, you’ll know that when it comes to investing, there are an abundance of variables that make that statement true: family, business endeavours, lifestyle, and goals are just a few considerations that differentiate one person’s situation (and portfolio) from another. While we could write novels on the first three aspects, it’s the goals that are a beast to tackle.

There are personal goals, business ones, goals for your family, philanthropy or lifestyle… and beyond. Goals come in different forms, too – short-term or long-term. Are you hoping your investment strategy will help you in achieving these goals? Just as you would give considerations and perspective to planning how to achieve a goal, an investment strategy should employ the same approach. Make sure it’s quantifiable and achievable.

Short-term investing or “tactical investing” can involve, as the name suggests, investing in new opportunities, dipping your toe into an investment trend or focusing certain investments on only achieving short-term goals. While this type of investing is relevant, especially in unstable economic times (believe it or not), it typically shouldn’t make up for the entirety of your portfolio. Why? Because to reach goals that are 15, 20, or even 50 years into the future, you need a strategy that is also built on thinking long-term. Focusing on a long-term strategy is of course, paramount. Not only for your goals, but so too for protecting yourself and your portfolio, i.e. what happens when instability hits the global, regional or even local economies – should you have to adjust your goals simply to weather market conditions? We think not.

Just as you would give considerations and perspective to planning how to achieve a goal, an investment strategy should employ the same approach.

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For Richard Leon of Richter Family Office (RFO), investment planning during times of economic instability or uncertainty boils down to three main categories: “Crises will always come and go. But having a structured approach to your portfolio from the beginning can lead to optimized results in the long run, even if there is economic instability. Three things to keep in mind when a general economic instability is prevalent: financial planning, good portfolio diversification and seeking out opportunities.”

Financial planning is an important aspect of wealth management, and it encourages one to put consideration into to two things: your story and your goals. As the protagonist in your own life story, your plotline is unique to you. Your story is impacted by many supporting characters and scenarios: those around you (your family, shareholders, employees, etc.), your environment (your lifestyle, business or philanthropic opportunities, etc.) and the circumstances outside of your immediate control. When you think about financial planning for yourself, your family and/or your future, all these aspects of who you are come into play, and not to mention, so do your goals.

Karen Sankhi of RFO, adds that a good way to incorporate both stories and goals into financial planning is portfolio diversification: “Depending on their story and their goals, we search for investments and managers best suited for that specific person. When it comes to putting together a diversified portfolio, there really isn’t a pre-packaged option, it’s all about customization. This is where RFO really helps families thrive. As an agnostic platform, we have access to the best managers and solutions from all over the world. We also have the valuable help of a wide range of experts from other Richter teams and partners who can offer advice and contacts to our clients. We evaluate each opportunity from an after-tax perspective and ensure it fits well within existing investments. And because we do not manage any solutions internally or have strategic relationships with financial providers, the families with whom we work can feel confident that we are always acting solely in their best interests.”

Managing a portfolio involves understanding what you are looking to achieve long-term and building a strategic asset allocation that will provide the best opportunity for reaching those goals. This is a process that RFO professionals assist clients with: selecting investment strategies through extensive research and due diligence, whether that be active money managers, ETFs, or private strategies, to build the portfolio in line with the target assets. The strategies are then properly monitored to ensure they are meeting expectations on a continual basis.

Spencer Clark, RFO, adds that what sets RFO’s approach to diversification apart is both an understanding of the individual involved, and of the market: “Around the strategic asset mix, RFO professionals also find tactical opportunities to invest in areas where we feel there is a strong risk-adjusted return potential. This may mean finding private investment opportunities in areas we feel have longer term tailwinds or simply taking advantage of short-term dislocations in markets. Again, the focus tends to be on finding opportunities where we believe there is good upside potential but where we also believe there is some protection on the downside. When we talk about diversification, we are mainly focused on building out different types of return streams so that no single asset will drive the return or risk of the portfolio. By understanding the families we work with and their individual needs, constraints and ways of thinking, we can build strategies that they can adhere to for the long run.”

Building a portfolio should be centred on one’s needs and goals versus attempting to fit into an advisor’s portfolio offering. It should also account for the next chapters in your story: multi-generational families typically face a broader set of challenges. Successful continuity planning demands coordination and an in-depth understanding of multiple stakeholders and objectives that are all unique to the family at the centre of the portfolio.

The focus tends to be on finding opportunities where we believe there is good upside potential but where we also believe there is some protection on the downside.

As family advisors, we strive to help individuals and families by creating an open dialogue with each other, and their stakeholders, in order to assess their specific goals and ensure that their investment structure provides them with the greatest odds of long-term success. This approach allows us to seek investment opportunities to suit the families we work with and complement their existing portfolio. When understanding not just the individual, but also their story, their goals, and their needs, we can properly advise our families even during unstable economic times, keeping everything aligned and on track with their aspirations, challenges and current lifestyle.

Empowering our clients to understand and have control over their financial picture means that we acknowledge that in our capacity as advisors, we have the responsibility to give our clients the final say. By creating a transparent and objective dialogue with our families we ensure that all investment decisions are made only after receiving client approval. Crafting and maintaining a long-term portfolio strategy that is as unique as you are involves a great deal of time and effort, but at RFO, we take care of the work, so you can focus on continuing your story and achieving your goals well into the future, whatever they may be.

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