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Investors vs. Institutions: Goal-Based Wealth Management in Action

Investors vs. Institutions: Goal-Based Wealth Management in Action

The American College of Financial Services
May 7, 2020

Meet Harry: he’s a 35-year-old mid-level executive who’s just walked into your office, looking for professional help in growing his investment portfolio and financial planning for a number of future expenditures, including a new house, a vacation condo, and sending his kids to college. As a financial professional and business owner, you want to grow your practice by helping Harry out—but to achieve the results you both want, you’ll have to think outside the guidelines of institutional investors and apply a more personal touch to your wealth management strategy. How does this work?

The first step in this process is to understand a key fact: individual investors are not institutions. There are many wealth management strategies that would work for a big private institution like Harvard, for example, that won’t help Harry get where he wants to be. But that doesn’t mean there’s nothing you can do. With the right knowledge, you can work with Harry as a financial advisor to develop a personal, proactive plan that leverages useful investing tools like technology, concentrates on asset location rather than asset allocation, and measures success against a defined goal rather than a set of benchmarks. This is what we like to call a “goal-based” wealth management approach to financial success.

Individual investors are usually driven by personal goals, such as planning for retirement, saving for their children’s education, or financing a large purchase. They must navigate their emotions and behavioral biases, perceived obligations to family members and society, a finite number of earning years, and a greater need to protect against uncertainty with help from financial advisors. The issues that matter to them are things like life insurance, estate planning, retirement planning, and other parts of their personal future. Institutional investors, on the other hand, are the pension funds, mutual funds, insurance companies, commercial trusts, and endowments that generally align on very specific goals. Corporations, for example, aim to borrow and invest to maximize shareholder value over the long term and prioritize customer service, while pension plans seek to provide regular cash flow to retirees. And unlike individual investors, institutions face a limited set of rules, like those of FINRA, that guide investment risk and asset allocation and often have an unlimited time horizon. Individuals focus on outcomes over the long term; business owners and institutions focus on customer service and metrics for financial success. Both provide very different models for the financial professional to follow.

To properly tailor your customer service to individual investors and their long term goals, it’s more important to understand how products work to achieve specific goals than to fixate on specific stocks, no matter what your client's net worth might be. Which products set the proper risk-return equilibrium for a start-up investment portfolio? Which offer the most attractive yield profile for those engaging in retirement planning? Then, start looking at factors such as generating tax alpha through effective asset location rather than asset allocation, and identify account-based characteristics that can improve returns and optimize tax efficiency.

As a financial professional, don’t think of an “institutional approach” to wealth management as adding strategies or asset classes as business owners might—instead, think of it as a commitment to research that leans into historical co-variances and unique investment factors. Consider it an approach that utilizes the right tools to deliver customized analysis and reporting that helps identify distinctive investment opportunities for clients of varied net worth. These are the kinds of opportunities that allow you, the financial professional, to take the financial goals of individuals like Harry, from estate planning and retirement planning to life insurance and other factors, and help make them a financial success as solid as the pillars of Harvard.


Wealth management isn’t institutional—it’s about the individual.


In a turbulent financial market, you need the confidence knowledge provides. Applied learning from core specialized wealth management subjects, including building efficient investment portfolios, evaluating financial instruments and asset allocation, and understanding complex planning strategies can give you a real advantage and help you land those high net worth clients.

Our guide, Everyday Investors Aren’t Institutions, explains why your approach to goal-based wealth management should be individualized, not institutionalized.

The American College of Financial Services is redefining wealth management for 21st-century financial advisors. To learn how you can reach financial success for your clients with our trailblazing program and unmatched faculty expertise, download your guide now or visit

Invest in your career with a professional designation.

To continue providing value to your clients, you have to go well beyond the usual investment advice. Through the Wealth Management Certified Professional® (WMCP®) designation program, you can master behavioral finance and learn the advanced strategies needed to create efficient, individualized portfolios that are attuned to each of your client’s unique needs and values. Offer your clients more.

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