CHAPTER 5

Define the End Investor

By failing to prepare, you are preparing to fail.

—Benjamin Franklin

First and foremost, one question needs to be asked of every investor, young or old. If you are managing the portfolio's consulting, the answer should be presented through the discovery stage. The question is: What type of investor are you? Make sure this question is answered honestly. Is the end investor aggressive, moderately aggressive, or conservative? At this stage, the view must be much broader. How much do you enjoy watching the market? Are you someone who is glued to the latest financial TV show, pulled into the frenzy of the day, or would you rather not watch the market at all? Remember, it doesn't matter how the question is answered; just be truthful, as this is the core of your foundation that will shape the investing decisions that are made. Sometimes it can be overwhelming to try to accurately categorize your client as an investor, particularly if the end investor is an institution without an investment policy statement. It is important to remain at the broad level, as some investors may not fit with 100 percent certainty into one particular category.

The easiest way to start identifying investor characteristics is from 10,000 feet above. Start very broad and work your way down to the specifics. To start, it is as simple as placing the end investor into one of two categories:

  1. Accumulating

    In its simplest form, an accumulating strategy can be looked at as a strategy ...

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