Goals-Based Financial Planning

It all starts with a plan.

All investors have financial goals, things they want their wealth to accomplish for themselves and those they care about. Investing is the means of achieving those ends. Too often, investors focus on whether markets are going up or down, not on whether they are making the desired progress toward their goals. Unfortunately, the mismatch between the desire for lifestyle predictability and market uncertainty creates investor anxiety that could prompt inopportune selling.

Goals-based planning shifts the focus to the client’s own outcomes, and on building plans that achieve those outcomes, even in the face of short-term market volatility.

We create different portfolios to address different needs. We start by planning for Core Needs, those must-haves, and we quantify the assets required to secure them.

To the extent that there are assets remaining after securing your Core Needs, we can plan for how to use them to accomplish more aspirational goals, like wealth transfer to your children, philanthropic intentions, even pursuing other business interests.

Our approach

Goals-based investing then seeks to maximize the predictability of the investment portfolio by matching investment time horizons with goal timing, providing for lifestyle spending in the short run while giving riskier investments an adequate curing period to grow.

Rather than allocating to stocks, bonds and cash, Cresset’s investment specialists utilize goals-based investment strategies that enable us to allocate client assets by time horizon.

Cresset’s Lifestyle strategy: Designed with the intent to produce cash flows from overnight to 7 years. Using historical market experience, the Lifestyle strategy focuses on low risk investments including bonds, private cash flows, MLPs, real estate and credit over a 3-year holding period.

Cresset’s Growth strategy: Designed with the intent to produce cash flows over 7 to 15 years, the strategy is built on a diversified portfolio of public market investments over a 7-year holding period.

Cresset’s Aspirational strategy: Designed with the intent to meet cash flow needs beyond 15 years. This time horizon provides the strategy with the flexibility to look beyond traditional public market investing for investment growth and cash flow.

We report progress to clients in a goals-based reporting framework, with portfolio allocations and holdings shown broken out by Lifestyle, Growth and Aspirational strategies. We use these meetings with clients to affirm their current and future spending expectations and to determine if the portfolio is growing in line with expectations. In addition, Cresset professionals can run sensitivity analyses to determine how changes in spending, or other factors, might impact their success rate.