CONSUMPTION BUDGETING

We have found over the decades that, for many clients, investment decision making and consumption patterns are linked, and clients with high expectations for returns tend to make worse decisions. Clients who withdraw excessively from their accounts also tend to make rash decisions at the first sign of trouble, because market-induced risk is viewed as an immediate threat to their consumption patterns and lifestyles.

Often, these investors experience the worst of what the market has to offer because they have a hard time contextualizing risks, expectations, and time. An experienced investment advocate can steer clients in the direction that they need to go but fear to tread. It’s especially important for that advocate to not be compensated for investment activity because this arrangement creates a situation in which agreeing with client bias generates commissions for the advisor. Avoiding this conflict of interest ensures the client has a trusted advisor with clear vision and unbiased perspective.

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Segment Wealth Management