What Your Wealth Manager Should be doing

It is not just current financial needs, but future financial needs that impact on the recommended structure of the portfolio.

Your report needs to deal with how the portfolio and the portfolio's planning will cope with these issues. The following are number of complex issues.

In retirement, some individuals will be drawing on both personal portfolios and pension investments (RRIFSs) in Canada.
- How much you take from either will affect the investment strategy and asset allocation of these portfolios.
- When you draw from your RRIFs and how much you draw will affect the structure of your personal investments.
Estate planning issues may also affect the strategy and structure of the portfolio.
- Do you really have an estate planning problem. It may be that your planned expenditure and financial objectives will deplete much of your estate.
- You may want to be able to transfer capital now to your beneficiaries. How much is it safe for you to give without affecting your future financial security?
Other areas of discussion could involve the impact of a sale of a business or decisions to continue earning via consultancy following retirement.
- If you intend to be earning after retiring, this can radically affect the structure of the portfolio that you need both now and in the future.
You may be concerned about the cost of paying for health care as you age.
- Do you really need an insurance policy if your assets are capable of covering the costs?

All these issues need to be resolved and decided before a portfolio can be constructed since they all impact on the ability of assets to meet financial needs over time and, the timing, structure and strategy of asset allocation decisions.

In fact, a portfolio needs to be planned well in advance of future needs. A well disciplined portfolio structure will start to take into consideration changing financial needs often as far away as 8 to 10 years, gradually adjusting structure through a client's income and capital inflows or taking advantage of extreme valuations to realise capital for restructuring.

Many asset managers consider these issues to be financial planning issues. In fact, because asset allocation is significantly affected by the inflows to and outflows from a portfolio as well as their size and timing, they need to be assessed within an asset management context.

Unfortunately this long neglect of these issues has left many without the necessary disciplines, structures and software to manage these complex relationships.