Goals-Based Advisory: What it is and How Goals-Based Planning Works?
Goals-based financial planning, also known as Goals Based Advisory (GBA), is an innovative, client-centric approach to wealth management. Instead of solely focusing on maximizing financial returns, GBA places the investor's life goals at the core of the planning process. This methodology provides a robust framework for implementing wealth management aligned with investors' aspirations and values.
What is Goals Based Advisory?
Goals Based Advisory is a financial planning strategy that aligns investments and wealth management with an investor's life goals. These goals can vary widely, from ensuring a comfortable retirement to funding children's education, purchasing real estate, acquiring stakes, supporting philanthropic causes, or securing a family legacy. By focusing on specific goals, GBA helps investors better understand their financial priorities and develop personalized plans that reflect their aspirations and values.
Foundations of Goals Based Advisory
Goal Identification
The first step in GBA is the clear identification of the investor's goals. These goals can be classified into three main categories:
- Security: goals that ensure financial stability and protect against unforeseen risks;
- Lifestyle: goals that maintain or improve the investor's standard of living;
- Aspiration: goals that reflect the investor's personal dreams and ambitions, such as philanthropic or entrepreneurial projects.
Risk Tolerance Assessment
Each goal has a different risk tolerance associated with it. For example, security goals typically have a low risk tolerance, while aspirational goals may accept greater risk exposure in pursuit of higher returns.
Goal-Based Asset Allocation
Instead of a single investment portfolio, GBA recommends creating multiple portfolios, each aligned with a specific goal. This allows for more efficient asset allocation by adjusting risk and expected return according to the importance and time horizon of each goal.
How it works at Jera Capital
Jera Capital implements Goals Based Advisory through a sophisticated and personalized approach, focused on its clients' values, purposes, and goals. Here's how the process works in practice:
In-depth Assessment and Understanding
Jera's work begins with a deep analysis of its clients' finances and life stage. This includes understanding their wealth structure and its origin, financial priorities, as well as their dreams and goals. This assessment allows for the design of a continuous and personalized learning journey.
Jera Plan: Wealth Structuring
The result of this assessment is the Jera Plan, which organizes wealth into three distinct blocks:
- Jera Capital Guard Portfolio: this portfolio is focused on the security and protection of short-term needs and goals, ensuring the provision of resources in adverse situations;
- Jera Endowment Portfolio: focused on the medium to long term, this portfolio is allocated across a global and diversified set of assets, with higher return objectives adjusted for the risk budget;
- Jera Aspirational Portfolio: allocated to assets that reflect specific investor characteristics, such as individual talent or intellectual capital, this portfolio aims to fulfill the investor's personal and legacy ambitions.
Access to Global Opportunities
Jera Capital provides access to the best global investment opportunities. With positions in private equity, venture capital, private and structured credit, among others, Jera investors have access to a curated investment ecosystem that encompasses innovative and impact-driven projects.
Continuous Monitoring and Adjustments
Jera Capital ensures that goals-based financial planning is a dynamic and continuous process. Portfolio performance is regularly monitored, with adjustments made as needed to ensure clients' financial objectives continue to be met.
Benefits of Goals-Based Advisory
Alignment with Personal Aspirations
GBA places the investor's personal aspirations and values at the center of financial planning, providing a more meaningful and motivating approach to wealth management.
Better Risk Management
By segmenting investments by objective, it's possible to manage risks more effectively, adapting asset allocation to the specific risk tolerance of each objective.
Greater Clarity and Focus
GBA offers greater clarity and focus to financial planning, helping investors better understand how each investment decision contributes to achieving their life goals.
Flexibility and Adaptability
The goals-based approach is flexible and can be adapted over time, allowing for adjustments as personal circumstances or market conditions change.
Conclusion
Goals-Based Advisory represents a significant evolution in how investments are managed. By focusing on investors' life goals, this approach not only improves the alignment between investments and personal aspirations but also provides more efficient and resilient wealth management. For investors seeking a more personalized approach centered on their needs and dreams, goals-based financial planning is an ideal choice.
To learn more about how Jera Capital can assist with your financial planning using Goals-Based Advisory, contact us to schedule a consultation with one of our specialists.
