Most people nowadays seek the advice and guidance of financial advisors to manage their finances properly. These financial advisors are a team of experts who manage your money to let it grow to its maximum potential in the coming years. But have you ever wondered how our financial advisors manage our investments? Here’s what these financial experts have to say.


The founder of LVW Advisors Lori Van Dusen shared one scenario where her longtime client announced she wanted to buy a multi-million dollar vacation home in Martha’s Vineyard. Not only that, but she also wanted to pay it in cash within the next ten years.

While this may rattle anyone who heard their conversation, Van Dusen didn’t flinch nor bat an eye with her announcement. Why? It’s because her client and her husband have already saved enough investments to maintain their lavish lifestyle after retirement.

According to Van Dusen, you and your client should share the same financial goals to make their investments a success.

Van Dusen also revealed she managed her client’s money in three investment buckets namely:

  1. for essentials (cost of living)
  2. for aspirations (like the luxurious vacation home or traveling around the world)
  3. and one for the legacy (for philanthropic efforts and bequests).

Since her client’s wish falls into the aspiration category, she started investing her client’s annual bonus in a portfolio with an aggressive asset allocation. The couple was also okay with the added risk since they knew even if they lost some money from the investment, it wouldn’t affect their lifestyle that much.

Six years later, the couple bought their dream vacation house. That’s 4 years earlier than their target time! What’s the secret to this massive success?


LVW Advisors, among other top firms like Raymond James, UBS, and Bank of America’s Lynch are now incorporating the goals-centric investment approach and behavioral science on finance to let their clients grow to their maximum potential.

According to Nobel Prize winner Richard Thaler, the application of “mental accounting” leads to people thinking about money differently depending on their goals. He explained how human tendencies like loss aversion, biased perspective, tend to have most investors buy at the top price and sell their investments when it hits the lowest point. According to Thaler, instead of putting your client’s investment in a traditional risk-tolerance questionnaire, financial advisors should base their risk tolerance based on their goals instead.

One of the objectives of implementing goals-based investing is to minimize committing mistakes like panic selling.

Big financial firms can accomplish that by assessing their client’s goals to determine the proper investment vehicles for them. In Van Dusen’s example, she put her client’s money in an aggressive allocation since they want their money to have high potential returns to buy their dream vacation house.

However, if your client wants to grow their money to fund their kid’s education, then it should be put in a moderate asset allocation for better security and stability. Instead of determining their risk tolerance based on figures, you should assess if whether or not the investments they put allowed them to accomplish their goals and dreams.


Aside from focusing on your financial goals, the financial advisor Stephan Cassaday also reiterates that advisors should also consider their client’s behavior to help them manage their investment portfolios effectively.

According to him, most people didn’t know what exactly they want in 30 years’ time, so they cannot determine what financial goals to achieve yet while they’re still young. Aside from that, your goals change as you walk through different stages in life.

Aside from the age, Dana Hanson of RZH Advisors also reiterates that the circumstances we encounter in life also affect our changing goals. For example, she had a client before who declared she wanted to buy a vacation house in the Caribbean and moved in there after she finished her chemotherapy as a way of celebrating her second life.

Furthermore, the proliferation of new tax funds in 529 colleges, 401(k), and IRA plans promote the diversification of your investments based on your goals, making it easy for you to manage multiple investments based on your goals.

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