Perspectives: What Is Goals-based Planning?

Goals-based planning emerged in response to the unmet retirement planning needs of Affluent/Constrained clients (using the terminology developed by RIIA® for the RMA® (Curriculum).

High Net-Worth/Over-funded clients, who are similar in nature to pensions and endowments, have their retirement planning needs sufficiently well met with traditional Wealth Management.  The RMA curriculum calls this space: Investment-based planning.

Mass-market/Under-funded clients have their needs sufficiently well met with traditional product qualification processes.  The RMA curriculum calls this space: product-based planning.

Many Affluent/Constrained clients have retirement planning needs that are not well met by Wealth Management or Product Qualification Processes because optimizing their retirement plan requires that the advisors work with both sides of their household balance sheet: The assets and the liabilities.

These Affluent/Constrained clients need Wealth and Consumption Management℠ instead of Wealth Management or Product Qualification Processes because many need to work creatively with other assets such as their mortality credit to make up for insufficient savings relative to their retirement income needs.  Others need to work creatively with new liabilities such as reverse mortgages.

This need to optimize the Household Balance Sheet℠ of Affluent/Constrained Clients over their retirement life-cycle means that goals-based planning has carved a new space that fits between investment-based planning and product-based planning.

The RMA curriculum presents all three forms of planning, setting benchmarking processes and protecting related I.P. to make sure that goals-based planning is used appropriately and not as a marketing slogan for investment-based or product-based processes.

 

Francois Gadenne
Co-Founder, Chairman ad Executive Director
RIIA®

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