Implementing the Unified Portfolio Approach in the Wealth Accumulation Phase

When I got my RIA registration in 2017 and began working as a financial planner, I started with the individual goal portfolio approach, where you run individual portfolios for individual goals. Little did I know how different life situations, financial situations, financial goals/aspirations, financial products, assets, and personalities my clients would have.

Some clients would come to me with 35 mutual fund schemes in the portfolio, a few others would have all their net worth in real estate. Some clients would be comfortably financially free, or their saving potential would be significantly higher than the savings required to achieve their financial goals. Some others wouldn’t have half the saving potential required to fund all their financial goals.

I would do a lot of intellectual gymnastics to allocate different products to different goals. In six months, some clients couldn’t tell which product was allocated to which goal. It would become even more complicated when products would change in the portfolio. I wouldn’t know how to review some of my client’s portfolios. It was challenging to apply the individual goal portfolio approach in every case.

I needed an approach that could accommodate differences and changes in life situation, financial situation, income, savings potential, risk tolerance and thereby asset allocation, taxation, financial products, and understanding of money management of my clients.

So I began thinking, why not treat all the assets as a single portfolio and manage the liquidity and the overall asset allocation of the portfolio? We must create or maintain enough liquidity in non-volatile financial products to care for our financial needs over the next 4 to 5 years. We can treat the remaining assets as a unified portfolio and manage them at the asset allocation level—no need to run individual portfolios for individual goals.

Here is how it can be done