Step 1 – Creating a Strategy That Reflects the Family’s Goals
When this family approached us, they weren’t in crisis. Their $110 million portfolio was diversified. On paper, it seemed like they were doing most things well. However, despite having three investment advisors at wealth management firms, they lacked one essential thing, a unified strategy. And as we soon discovered, strategy matters.
Each advisor was running their own version of the plan—based on their own assumptions, tools, and priorities. No one had asked the simple but critical questions: What is this portfolio really for? What are the family’s priorities? Are we investing with purpose or just managing today?
We started by pausing the noise and stepping back.
Step One: Documenting What Matters
The first thing we created was an Investment Policy Statement (IPS). This isn’t a legal document. It’s a blueprint. It distills what a family is trying to achieve and how we’re going to get there. The IPS included:
- Objectives: Preserve capital. Generate consistent after-tax income. Avoid complexity.
- Time Horizon: Multigenerational, with a need for stable income over the next 15–20 years.
- Liquidity Requirements: $600,000 per year in spendable income.
- Risk Tolerance: Moderate. Comfortable with volatility in equities, but illiquidity in alternatives needs to be considered carefully.
- Target Asset Mix:
| Asset Class | Target Allocation |
|---|---|
| Canadian Equities | 15% |
| U.S. Equities | 15% |
| International Equities | 10% |
| Fixed Income | 30% |
| Real Estate | 15% |
| Alternatives | 10% |
| Cash | 5% |
This was the first time the family had a written framework for evaluating decisions, a reminder that strategy matters. It wasn’t just about what was in the portfolio. It was about aligning every choice with long-term goals.
Why Most Portfolios Drift
Without an IPS, portfolios tend to grow based on the “flavour of the month” and not in a good way. Advisors change. Products are added. Risk gets redefined with each quarterly call. And over time, a well-meaning portfolio turns into a messy attic of financial products.
This family didn’t need to add more complexity. They needed the clarity to focus on what mattered.
Strategy Matters
No amount of diversification can substitute for a real plan because strategy matters. If your portfolio doesn’t have a written policy that reflects your goals, your risk tolerance, and your income needs it’s time to start there.
Next up: Step 2 – If You Can’t See It, You Can’t Manage It
For a full look at the transformation, see our case study: When Diversification Backfires, Streamlined Stewardship Steps In
