Market insights and analysis

How dynamic, risk-managed investment solutions are performing in the current market environment

1st Quarter | 2022

Market insights and analysis

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Updates on how dynamic, risk-managed investment solutions are performing in the current market environment.

By David Wismer

They say New Year’s resolutions are meant to be broken.

I am sure there are at least a few readers of this article who are already frustrated—10 days into the year—by their inability to follow through on some of their well-intentioned resolutions.

In fact, it is probably more than a few.

According to research from global firm YouGov, in 2020 about 30% of Americans planned to make New Year’s resolutions.

But the same research indicated that in the prior year, “just 7 percent of US adults say that they stuck to all of their 2019 resolutions. … 19 percent say that they were able to stick to some of their resolutions, though not all of them.”

That is pretty consistent with findings from an article published at Gallup.com, which says, “By mid-February, 80% of the people who set New Year's resolutions will have abandoned them—no matter how large or small the goal.”

Given these rates of success, I am pretty pleased that I saw significant progress last year on working toward my sole “formal” resolution for 2021 … and I intend on making further inroads on the exact same resolution in 2022.

Like many other Americans, my resolution falls into the category of “personal well-being/health/fitness.” Most resolutions seem to fall under this category, according to most of the data I found, followed by those oriented to financial matters, career growth, improving personal/family relationships, travel/hobbies, and charitable efforts.

Good luck to you if you also have a 2022 resolution—though luck really has nothing to do with it!

Resolutions vs. goal setting

I was initially surprised to see the estimate that only 30% of American adults make New Year’s resolutions. It felt low to me.

But then I had some conversations with several colleagues and, if they are representative at all, it now feels high.

I think they collectively had an interesting insight. They felt that making New Year’s resolutions feels a little contrived or gimmicky—almost guaranteeing some level of “failure.” Aside from myself, none had any specific resolutions for 2021.

However, they almost all universally had “set goals” for 2021, and say they do so every year. They felt that it made much more sense to set a series of realistic and achievable milestones, or steps, in getting to a larger goal—rather than the “all or nothing” contextual feeling of a “resolution.”

Some have more of a “spreadsheet mentality,” specifically setting up very detailed objectives and time lines. Others are far more informal but nonetheless have defined their end goals and the broad steps needed to get there.

The opinions of this group varied widely, but in many ways closely mirrored some of the comments found in a recent Atlantic Monthly article on 2022 resolutions:

“Psychologists, businesspeople, and motivational coaches offer endless, sometimes conflicting, advice: Set bite-size goals that you can realistically accomplish; set difficult goals that stimulate you with a challenge; make your goals easy to measure; seek meaningful well-being rather than shallow self-improvement; avoid temptation; visualize success; congratulate yourself for progress; don’t give up if you’re lagging. …”

But the author also points out, “If goals are too narrow or too challenging or too many are attempted at once, they can obscure the bigger picture or lead people to focus disproportionately on short-term gains. Getting goals just right is hard.”

Goals-based investing

In the dozens of interviews I have conducted with successful financial advisers across the U.S. over the past eight years, the vast majority employ some version of goals-based financial and investment planning.

Several years ago, I authored an article on this topic for Proactive Advisor Magazine that combined the adviser insights I had learned with more of an academic and research-based perspective. Here is a quick, edited excerpt:

“Goals-based investing has two meanings in today’s retirement planning environment:

“1) The practical notion that an investment plan should be based on achieving realistic goals customized to an individual’s (or couple’s) overall financial-planning requirements, risk profile, and time horizon—not some far less relevant market benchmark. … It starts with a financial plan that attempts to identify realistic levels of returns that will help a client meet their financial goals, typically beginning with the most fundamental goal of generating adequate income (along with other sources) in retirement.

“2) The philosophical idea that investment success should be measured on how it helps clients achieve the lifestyle goals they desire. Those goals could be the most basic, such as attaining a comfortable retirement. … Or, they could also be more ambitious, such as helping fund a grandchild’s college education, buying that long-desired vacation home or condo, making a significant contribution to a favored charity, or going back to school to jump-start a new career.

“By its very nature, a goals-based investment plan will not see returns anywhere near those of the best bull markets. But, importantly, it should also not suffer the worst drawdowns seen in severe bear markets. In general, the objectives of a goals-based investment plan are to smooth out volatility, achieve steadier returns, and project a range of returns for a client that is consistent with their risk profile and has a reasonably strong mathematical probability for success over time.”

Flexible Plan Investments’ goals-based approach: OnTarget Investing

In defining its overall approach to investment management on behalf of financial advisers and their investor clients, Flexible Plan Investments (FPI) strongly endorses a goals-based investing approach … but takes it to a higher level.

FPI states,

“An investment portfolio should be tailored to the time lines, risk tolerance, and financial goals of the investor. The benchmark used to set investment expectations and track the progress of that portfolio should be just as customized.”

To this end, FPI created OnTarget Investing in 2007 to help investors and their financial advisers define realistic investment goals and set appropriate personalized benchmarks. FPI believes that setting and consistently articulating realistic goals is the key to helping investors stick to their financial and investment plan. 

There are five fundamental steps to the process for each investor client, in consultation with their financial adviser: (1) creating a personal and realistic benchmark, (2) designing your solution, (3) implementing the targeted investments, (4) managing to the target, and (5) reporting your progress.

FPI summarizes,

“Using our proprietary software to marry traditional and alternative investments with strategic and tactical strategies, we will design a solution that is consistent with the information you provided—to set appropriate expectations for your investments. Investment markets are dynamic, requiring continuous assessment to assure your account is OnTarget to reaching your goals. Our process applies multiple management approaches to reduce market risk. …

“Evaluating progress is a crucial component of the OnTarget Investing process. The investor and financial adviser will regularly receive an OnTarget Progress Report that shows how the portfolio compares against the investor’s personal benchmark for success.”

A detailed explanation of how the OnTarget Progress Report helps each client visualize their portfolio’s progress over time can be found here.

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Setting and following through on “resolutions” every year may be a formidable task for most people. But FPI’s OnTarget Investing approach will likely make monitoring—and reaching—customized investing goals a far more positive and achievable outcome.



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