Starting with the end in mind: Goals-based wealth management

Reuben Rashty

Life is a series of choices, and when it comes to your wealth, the choices you make today could have far-reaching or unexpected effects on your financial life. To help ensure you can achieve the future you envision, you need a long-term plan. But before you can create that plan, you need to know where you want to go.

In the past, wealth management was virtually synonymous with investment management. But today, an increasing number of financial advisors and firms have moved toward a more modern approach to managing wealth: Goals-based wealth management.

Goals-based wealth management helps you manage your wealth to achieve your goals, rather than to achieve an arbitrary rate of return. This approach to wealth management helps give you a more accurate picture of where you stand in relation to your most important aspirations and what you will need to do to make those aspirations a reality.

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Benefits of goals-based wealth management

Because it is based on your unique goals, a goals-based wealth management strategy is custom-designed to fit your circumstances. In addition, goals-based wealth management can help you:

1. Develop a comprehensive view of your wealth.

Rather than just focusing on your investment portfolio, goals-based wealth management takes a holistic view of your wealth, including your current income, future earning potential, retirement plan(s), and Social Security, as well as your current liabilities and future expenses.

2. Integrate tax efficiency into your overall wealth management strategy.

Goals-based wealth management incorporates tax smart strategies into the wealth management process from the beginning—smart asset location when making investment decisions and intelligent withdrawal techniques when it comes time to liquidate to meet financial needs.

3. Tailor risk management to your preferences.

Goals-based wealth management defines risk in terms of the probability of achieving your goals, not just in terms of market volatility.

4. Make more informed financial choices.

When you have a comprehensive view of your wealth, you have a greater sense of clarity and control over your financial life.

5. Feel more confident about your investment decisions.

Measuring success by your progress toward your goals, rather than against market benchmarks, can help prevent emotional investment decisions.

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Putting goals-based wealth management into practice

An experienced financial advisor can help you implement a goals-based approach to wealth management using a disciplined four-step process. The first—and often the most important—step is discovery, an honest, open conversation about your goals and your entire financial picture. In the second step, your Financial Advisor works with you to assess various scenarios and advise on appropriate strategies designed to help you meet your goals. Once you have agreed on a personalized wealth strategy, your financial advisor recommends a combination of accounts and products that will help you meet your goals and needs. Finally, as time progresses, your Financial Advisor will periodically review your financial situation with you, making adjustments according to your needs, life events and changing market conditions.

If you’re ready to stop chasing returns and start focusing on what really matters to you, talk with a financial advisor about how you can put goals-based wealth management into action.

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Want to talk to Reuben about this or other topics featured in The Economic Blueprint? Please email him at reuben.rashty@morganstanley.com or call him at 248-723-1843. You can also contact Reuben’s colleague Kyle Zwiren, J.D. at kyle.zwiren@morganstanley.com or 248-723-1870.

Reuben Rashty is a Managing Director / Financial Advisor with the Wealth Management Division of Morgan Stanley in Bloomfield Hills, Michigan. The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives. Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Smith Barney LLC, Member SIPC, or its affiliates.

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© 2020 Morgan Stanley Smith Barney LLC. Member SIPC. CRC 2800765 1/2020