It’s hard to get to your destination when you don’t know where you are going. Investing without a game plan is an impossible task that generally leads to frustration for the investment manager and for the client.
Investors need to start with some sort of financial plan. While plans mean a lot of different things to different people and there can be varying degrees of detail driven by current circumstances, before investing there should be something in place that gives the investment manager guidance.
That guidance relates to investment time horizon, return objectives, cash flow and liquidity needs, tax considerations, client circumstances, and risk tolerance. With the requisite goals and objectives in place, the investment manager can implement the strategy to fit as best possible. Without it, the investment manager is essentially feeling his way in the dark.