This thinking, he says, goes against empirical and academic evidence which shows that the ability to successfully pick the right stocks, the right fund manager, and the right time to get in and out of the market is an exercise in futility. An effective investment plan should establish the appropriate structure for an individual.
Many financial planners rush in and concentrate on placing investments as a first step.
However, getting the tax structure correct can make a significant difference to the overall returns of a portfolio. The second part of the wealth management process is what you might call an investment philosophy - without which you would be essentially investing in the dark. Investment risk doesn't refer to losing money, it refers to volatility. As a long-term investor, you can put up with risk or volatility because you are prepared to stay there for the long haul. One of the major changes in capital markets in the last 10 years has been the growth in the number of asset classes.