Specializing in retirement planning and personalized investment management.

Financial Goals

Financial Goals

Your financial goals may include a long retirement, extensive travel, education funding for children or grandchildren, paying for weddings, buying a vacation home/boat/RV, and/or establishing your legacy. Some of these goals may be more important than others. We discuss and prioritize your goals and learn more about the concerns you have.

We use several analysis and testing tools in our financial planning process.

Cash Flow

In our analysis, a detailed model of your estimated cash inflows and outflows is built to span your expected lifetime.  This shows the amount and timing of each income and expense.  We use sophisticated planning software that is not bound by conventional chronological order. It offers tremendous flexibility. Your model may have future, higher-priority goals being funded before closer, lower-priority goals.

Example 1: Let's say retirement is 15 years away and it's your top priority. College funding, while important, is a lower priority, but it's only 4 years away. In this scenario, if forced to make a decision, you would rather keep your money for retirement and have your child fund their own schooling through student loans. However, you'd prefer to do both.  How do you do that? How do you know when you have enough for retirement so you know you can fund college? That's what we set out to accomplish with our planning exercise.

Example 2: We typically split client retirement goals into several separate goals such as "basic retirement needs", "medical expenses", and "travel & leisure". So taking our 1st example one step further, let's say that you would like to make sure your basic retirement needs and future medical costs are met first. If there's money still available you would like to fund college as priority #3. Finally, if you can meet all of these goals, you'd like to be able to spend more money on travel and leisure in retirement. In this scenario, the model we've built for you jumps your priorities into the future, back for college, and into the future again. This is what we mean by flexibility in the planning process.

Example 3: Flexibility isn't just in the order we fund goals, it's also in the goals themselves. As we help you refine your financial goals, we don't just use one static figure for each, we assign a range of figures for each goal.  Figures range from the ultimate "Ideal" amount to a less, but still adequate "Acceptable" amount for each goal. Here's an example of #2 with real numbers.






Basic Retirement Needs




Medical Expenses








Travel & Leisure



Monte Carlo Probability Analysis
Once we’ve built the model to align with your goals and wishes, we run a sophisticated probability analysis on your present situation to project the chances of reaching your goals (i.e. you currently have a 65% probability of meeting your financial goals). We call this your ‘baseline’ scenario.

Your baseline scenario may need slight tweaking or a complete overhaul. We use various "what if" scenarios to demonstrate how different changes would likely affect your chances of success (i.e. if you do this, your probability of success increases to 72%). Examples of simple "what if" scenarios are 'what if you retired later', 'what if you saved more money', and 'what if you adopted a more aggressive portfolio'. Usually it is necessary to combine several "'what if" scenarios for an optimal solution.

It is important to create a financial plan that has a high probability of success, but it is also important that you are comfortable with it. If we're going to recommend that you save more money, you have to feel comfortable with your new cash flow. You know your situation better than anyone else, and that is why our financial goals planning is very interactive. Together we develop and experiment with different combinations of "what if" scenarios until we find the one that works best.

Stress Testing

There are two types of stress testing that we perform: "Bad Timing" and "Under Perform". 

Bad Timing is where the client's portfolio averages what we expect it to over time, however, there are big losses in the first two years of the plan.  For example, we may use an expected rate of return of 7.5%.  The plan averages that over time, but we incur losses of -19% and -6% to start with. No one wants to retire and then have a market meltdown.  This allows us to test the portfolio and our strategies in conditions similar to 2008 so we know how they would fare.

Under Perform is a test where we decrease the long-term performance of the investment portfolio below its expected return.  It's different than Bad Timing because it models long-term under-performance (over the life of the plan) instead of just a few years.  For instance, instead of our plan's 7.5% expected return, we would purposely run the plan at 6.5%, 6%, or even lower.  This test allows us to see how sensitive the financial plan is to portfolio performance.

Withdrawal Rate Sustainability

This is simply a test of how much you are taking out, or can take out of your investment portfolio.  Take out too much and you risk depleting your portfolio.  Take out too little and your standard of living is artificially low.  There has been a lot of research conducted on sustainable portfolio withdrawal rates.  While some general guidelines have emerged, it is still dependent upon individual circumstances. 

We scrutinize your portfolio's withdrawal rate to make sure it is sustainable. We also discuss with you several strategies for keeping it that way.

Our entire financial planning process is designed to provide you with confidence in your plan.  Only meeting one of these tests is not an indicator of success.  On paper, a cash flow plan may look great, but it might fail under one of the probability analyses.  A sustainable withdrawal rate may mean you won't run out of money, but it may mean you run out of lifestyle. A successful financial plan is one that generates adequate cash flow to keep up with inflation, maintains a sustainable portfolio withdrawal rate, and manages high success rates when put through various probability and stress tests.