Portfolio vs. Planning: Are They Mutually Exclusive? - Butler Financial, LTD


Portfolio vs. Planning: Are They Mutually Exclusive?

There has been much discussion regarding individual investment portfolios and how they relate to overall Financial Planning.  If you feel like there is much more conversation, debate, marketing effort and overall emphasis on the actual portfolio; you would be correct.  Mutual Funds, ETF’s, SMA’s, Annuities and Fee Based Accounts are regularly discussed and advertised in multiple mediums to showcase the features and benefits of each respective investment product.  Features and benefits are analyzed.  Facts and comparisons are made about portfolio diversification, asset allocation, portfolio managers, investment expense ratios and more.   If you think that the individual portfolio garners the lion’s share of an individual investor’s attention; you’re right again!  However, the story doesn’t end there.  

A comprehensive, consistently updated financial plan is invaluable to an investor in multiple ways.  Sitting down with your CERTIFIED FINANCIAL PLANNER professional to formulate a plan that may span several decades is probably the most important thing that you can do to put the percentages of a successful retirement in your favor.  Budgeting, cash flow needs, rising healthcare costs, Insurance products and lifestyle choices are just a few of the things that must be addressed when working on a plan.  Discussing risk tolerance/parameters, desired lifestyle and charitable giving are additional subjects that deserve attention.  

Estate Planning is another important component of a viable financial plan.  Should assets be placed in a trust?  Is there a special needs child within the family that you would like to ensure proper care for?  Have your philanthropic needs been met?  Or would a Charitable Remainder Trust make sense for you to set up?  Do your last will and testament, powers of attorney, and advance healthcare directives reflect your current wishes?  

As you can see, there is a lot to contemplate when it comes to the Financial Plan.  And the decisions that are made regarding it can be impactful and long lasting.  

The Investment Portfolio is an equally important component of the Financial Plan and must be evaluated and updated regularly to ensure that the plan remains viable.  The best financial plan imaginable is not feasible if the portfolio component does not perform.  Financial plans succeed or fail based on the portfolio performance.  Does your current asset allocation reflect your current risk tolerance; or has it become noticeably misaligned over the years?  Is your risk assessment consistent with what is currently owned within the portfolio?  Is enough yield being generated?  Are you diversified properly, or are you overweighted significantly with your Employer’s stock?  Have you included all necessary items in your budget?  Do your varying cash flow requirements as you age reflect appropriately?  If the portfolio fails to perform as projected, a portion of the financial plan is rendered inaccurate, too.  As you can see, the portfolio and the overall financial plan are intertwined and dependent on each other.  They are not separate entities and are unable to operate successfully without each other. 

Contact your CERTIFIED FINANCIAL PLANNER professional to ensure that both your plan and portfolio are working equally hard to provide you with increased probability of a long, successful retirement.  


**Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.


Any opinions are those of Butler Financial, LTD. and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.


Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.  Any opinions are those of Robert E. Campbell and not necessarily those of Raymond James.  Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation.  Prior to making an investment decision, please consult with your Financial Advisor about your individual situation.  Investors should consider the investment objectives, risks, charges, and expenses of an investment company carefully before investing.  The prospectus is available through your investment professional.     

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