BSM's Financial Planning Software and Portfolio Monitoring Tools Take Planning Principles and Put Them into Action

BSM's Comprehensive Integration Summary

Portfolios Executed with Investment Products Rise from the Foundation Built Using Financial Planning Software 

A financial plan sets the course that the portfolio and investment product program executes. A financial  planning approach that does not tightly integrate portfolio design, investment analysis, investment selection, and trading is prone to inefficiencies and compromises. There are three vital principles necessary for a financial plan to be optimally executed. 

  • Time Horizon Matters in Portfolio Design

Investment characteristics change depending on the time horizon. An investor’s risk tolerance, income/growth need, liquidity, and tax considerations shift from one extreme to another as the horizon moves from the short term to the long term. Against these continuums are needs and goals that both commingle in specific time horizons as well as span horizons.  Every investor, from the individual to the institution, has exposure to these different time horizons and, as a consequence, has horizon-based portfolio segments indicative of the shifting characteristics. Therefore, if the financial plan considers just a single portfolio view — the single pie chart presentation — and does not recognize these discrete horizons and their associated characteristics, then significant inefficiencies develop.

  • Needs and Goals Commingle in Time    . . . as do Funding Sources

Each need and goal requires a current or future funding source in order for the financial plan to be viable. However, since certain needs and goals may require funding in the same time horizon and across multiple horizons, portfolioinvestment, and asset sources require an integrated, horizon-based analytical view as well. It is necessary then, to incorporate all income, portfoliosproducts, and assets, be they liquid or illiquid, into the planning for the tightest, most efficient execution.

  • Investment Products Execute the Portfolio Design

financial plan that only considers asset allocations fails to analyze to the depth of the actual execution — the investment product. Without this linkage, you must use external tools and resources for identifying those products that optimally implement the portfolio design; these resources become disconnected from the tools, analysis, and output that formed the financial plan in the first place.

Investment Characteristics and Time Horizon Chart

Portfolio Allocations and Time Horizon