When thinking about your investments, what is one of the first things that pops into your head? I’d be willing to bet that investment return is right up there at the top of considerations. Obviously, return is a huge deal, but from the advisor side of the table, I’m also concerned with how much risk (fluctuation for a certain amount of return) the investment has, and how the investment interacts with the other investments held by the client. In other words, if a client has an investment with a great track record, but three other holdings that are very similar (same industry, size, etc), she may be taking on more risk than she realizes by buying this new investment.
I’ve been coaching clients to look at return in a different way—in what I call a “Family Rate of Return”. Basically, this is the rate of return a client needs to accomplish their unique goals, and frees them from the burden of chasing an arbitrary “best they can possibly do” number. Using tools such as eMoney, we can hone-in on what a client truly needs, and in most cases, we find out that they do not need to take as much risk as they may have previously thought to reach their retirement goals. This analytical approach gives clients great peace of mind, and it also gives us more options to spread clients’ investments among various options with a goal to protect downside, rather than chase unrealistic returns.
Studies show that having a plan greatly increases your odds of success in retirement planning. If you’re interested in finding out what your Family Rate of Return is, or if you want to know if you’re on the right track for retirement, let us know.