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Financial Planning Takes the Guesswork Out of Portfolio Performance

Lawrence C. Fiorella


Investors are finding themselves challenged to exercise the most rare of investment strategies these days, patience. It’s understandable that when markets decline people are concerned. Should they get out and wait for things to turn around to get back in?

Any good advisor will tell you “no.” And for many good reasons. We know unequivocally that trying to time the market is folly. And converting to cash means you’re losing money every day to inflation. As well, downturns have always been followed by recoveries that push markets higher than they were before their respective declines.

But there’s an even better reason to be patient, a more meaningful perspective on building wealth: your investment portfolio is only one part of a financial plan, and in times good or bad staying focused on the goals that are the foundation of your plan is what’s most important.

The process
When we go through the process of financial planning we’re getting a picture of all the pieces of the puzzle that is your financial world. It includes investment planning—for retirement, children’s education, a large purchase like a second home, health care—all goals that require investment planning. But that’s only part of the plan, the last part. Before putting together a portfolio, you and your advisor consider risk management, that is, protecting your assets from events that could keep you from reaching your financial goals. You’ll want to assure adequate cash flow to meet your expenses, to budget for now and what you expect to need in retirement. Your financial plan will include estate planning, what you anticipate leaving behind for your heirs and designated charities, and how those assets will be distributed. Those elements of your plan will determine how to design your investment portfolio.

Financial planning takes the guesswork out of portfolio performance. What will you need to achieve the goals in your financial plan? What you need from your investment portfolio will depend on the combination of your retirement goals, your assets, and your current income. If you and your advisor determine you’ll spend $100,000 a year and you estimate living 30 years after retiring, you’ll need $3 million in today’s dollars, minus estimates for inflation, plus estimates for portfolio growth. If you and your advisor determine you won’t have sufficient assets at your projected retirement age, your plan could include delaying retirement.

Specific to you
Your plan is designed specifically for you, your finances, your life, your goals, so you it doesn’t make sense to listen to what someone else is doing with their investments. Their situation is different from yours. Are you retiring at the same time? Living that person’s life? The financial plan, if done well, is specific to you.

Your plan can change over time—sell your house, get a different job, get married, go through a divorce. You and your advisor should review your plan at least once a year to ensure it continues moving you toward your goals, getting you from point A to point B. There could be detours along the way, but if you are true to your plan and with the help of your advisor you should be successful.

All of which is to point out that your investment portfolio shouldn’t drive your plan; it should be the other way around. Your plan will determine what you need and therefore how you and your advisor will invest to get you to those goals.

Markets will recover
It can be unsettling to look at financial statements during a down market. But remember that you’re not losing money unless you sell. In fact, a down markets is an excellent time to create a financial plan. When you are rolling money over into investments, you’re buying at their lows. If history repeats itself—and it always has—the markets will recover. The focus should be on your financial plan; if your plan still applies, you can wait.

With a financial plan in place, you can go about your life and your job knowing you’ll have the money you need to retire. The financial plan allows us for patience, and when it comes to reaching your financial goals, especially in times of market downturns, patience is the essential virtue.

For more information or to talk with an HBKS wealth advisor, call us at (716) 672-7800; or you can email me at


The information included in this document is for general, informational purposes only. It does not contain any investment advice and does not address any individual facts and circumstances. As such, it cannot be relied on as providing any investment advice. If you would like investment advice regarding your specific facts and circumstances, please contact a qualified financial advisor.

Any investment involves some degree of risk, and different types of investments involve varying degrees of risk, including loss of principal. It should not be assumed that future performance of any specific investment, strategy or allocation (including those recommended by HBKS® Wealth Advisors) will be profitable or equal the corresponding indicated or intended results or performance level(s). Past performance of any security, indices, strategy or allocation may not be indicative of future results.

The historical and current information as to rules, laws, guidelines or benefits contained in this document is a summary of information obtained from or prepared by other sources. It has not been independently verified, but was obtained from sources believed to be reliable. HBKS® Wealth Advisors does not guarantee the accuracy of this information and does not assume liability for any errors in information obtained from or prepared by these other sources.

HBKS® Wealth Advisors is not a legal or accounting firm, and does not render legal, accounting or tax advice. You should contact an attorney or CPA if you wish to receive legal, accounting or tax advice.

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