Friday, February 12, 2010

Others Are Discovering What We've Known for Years

February is when most Treasury STRIPs mature in bond ladders for our retirees, so in addition to preparing tax returns we've been busy talking with clients about cash flow. It's been very gratifying to visit with people who are depending on their portfolios to provide their income, yet despite the market turbulence of the past two years have had no worries about needing to reducing their current standard of living and have been able to comfortably maintain a long-term view of their investments.

Having these discussions reminded me of an article I read in the fall. Jeff Benjamin wrote in the financial trade journal Investment News about how others in the industry are 'discovering' new ways of building a bond ladder and supposedly changing the 'way financial plans are constructed' by focusing in cash flow rather than risk tolerance.

As you may know, I am a founding member and past-president of ACA - the Alliance of Cambridge Advisors. ACA is an elite group of holistic, fee-only advisors who practice true financial planning - not just investment management, not investments and retirement planning, but inclusive planning including proactive tax, insurance, estate and lifestyle planning as well as investment strategies based on Functional Asset Allocation™.

ACA has embraced objective endogenous factors such as cash flow needs over subjective factors such as risk tolerance surveys since its inception. It's sort of interesting (and more than a little satisfying) to see principles that have been standard ACA strategy for years being touted as a 'new' way of looking at fundamental financial planning.

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