The process begins with an initial consultation, where the portfolio manager gets to know the client, their financial background, investment experience, risk tolerance, and long-term aspirations. This meeting helps establish a foundation for the financial planning process.
The portfolio manager conducts a thorough review of the client’s current financial situation. This includes evaluating income, expenses, assets, liabilities, insurance coverage, tax situation, and any existing investment portfolios.
The portfolio manager works with the client to define their financial goals and objectives. These goals could include retirement planning, buying a house, funding children’s education, selling a business, or any other specific financial milestones.
Financial goals are often categorized based on their time horizon, which can be short-term (1-3 years), medium-term (3-5 years), or long-term (5 years or more). The time horizon influences the investment strategy and risk tolerance required to achieve each goal.
Based on the client’s financial goals, time horizon, and risk tolerance, the portfolio manager formulates an investment plan. The plan outlines the recommended asset allocation, diversification strategy, and specific investment products tailored to achieve each goal.
At Virtue Asset Management, the portfolio manager and client create an Investment Policy Statement (IPS), which formalizes the client’s financial objectives, risk tolerance, and guidelines for managing the portfolio. The IPS serves as a roadmap for making investment decisions and acts as a reference point during market fluctuations.
Financial goals and circumstances may change over time, so portfolio managers conduct regular reviews with their clients to ensure their investment plan remains aligned with their objectives. Adjustments to the portfolio may be made based on changing market conditions or life events.
In complex financial situations, portfolio managers may collaborate with other professionals, such as tax advisors, estate planners, or insurance specialists, to ensure a comprehensive and coordinated approach to financial planning.