Introducing FINANCIAL LIFE GOALS
On the road to financial wellness
Study after study suggest a grim truth for the achievements of the financial service industry: Stress related to our personal financial situation beats other concerns, including stress related to our health and family. We don’t think it has to be like this.
37% of people say that money and finances are the biggest source of stress in their lives.
Source: Red Associates
We developed FINANCIAL LIFE GOALS to help people reduce financial stress and improve their financial wellness. This is our why.
The context of financial wellness
Private investors are often criticised for being “non-sophisticated”. This is not only related to a lack of understanding of financial instruments, but as much the tendency for private individuals to sell out of their portfolios when markets are falling. With hindsight, this is often considered “non-sophisticated”. However, from our perspective, we find that the problem is rather that the offering for private investors are too “non-sophisticated” to solve a complex optimization problem with little support for financial advisors in terms of tools.
We believe that a private individuals’ financial situation is filled with complexities. The uncertainty around how long an individual is likely to live, and how much can be saved throughout a lifetime, is likely to be larger financial risk factors than the investment portfolio itself. In addition, often only a limited component of an individuals’ total wealth is covered when financial advice is given, excluding important components such as holdings in real estate, private equity and pension savings.
Despite the uncertainties outlined, we don’t find it to be an excuse for individuals not to do financial planning, or for financial institutions not to bring investment solutions that help individuals manage this complexity.
The FINANCIAL LIFE GOALS investment advisory process
We believe that the key to success for private investors is an individual financial plan that evolves around an ongoing investment advisory process.
We advocate an investment advisory process that centers around individuals and their unique financial situation.
The FINANCIAL LIFE GOALS investment APIs
The financial service industry, as well as new online offerings are increasingly developing digital solutions to help clients get better investment advice. However, for any solution to be helpful, sophisticated calculations need to be carried out, but presented in a simple and intuitive way. This is what we offer from FINANCIAL LIFE GOALS with our investment API at the center.
In upcoming notes, we will dig into topics such as
- The importance of non-bankable assets for giving investment advice
- Why private portfolios need to de-risk towards maturity
- How to account for human capital and savings uncertainty in a portfolio
- Dealing with risk scenarios in a financial plan
- Prioritizing between multiple financial goals
- Impact of investment views on portfolios
- Goal based investing: how to estimate a future liability
We will be excited to hear your thoughts on our series of investment notes. Contact us anytime via contact@financial-life-goals.com
