Northern Trust Develops Goals Driven Investing Approach
Approach Aligns Financial Assets to Life Goals
CHICAGO -- March 6, 2013
Reflecting desires of wealthy individuals to focus more explicitly on meeting
specific life goals, Northern Trust has introduced a purposeful, proprietary
approach to goals-based investing. This method, which represents an evolution
in the way assets are managed to achieve clients’ goals, aims to align
specific assets to stated objectives.
Traditionally, investment advisors evaluate a client’s risk tolerance and time
horizon and map them to an asset allocation model. While Northern Trust
continues to provide these services, our approach focuses first on a thorough
review of client goals, such as buying a second home or setting up a
charitable foundation. Then we develop a distinct mix of investments
appropriate for reaching each goal.
“We’re focused on helping our clients achieve their goals in life,” said Jana
Schreuder, Northern Trust’s President of Wealth Management. “We tailor a
client’s investment program by matching assets with goals. This allows our
clients to better understand how their investment strategies and wealth relate
to their future needs and aspirations.”
Northern Trust’s recent Wealth in America Survey, which provides insights into
the financial attitudes of wealthy Americans, revealed some inconsistencies
around goals. It found that:
*81 percent of high net-worth individuals (with investable assets of $5
million or more) say that financial planning should encompass life goals,
yet only 11 percent have established a financial plan as a step toward
achieving their goals.
*High-net-worth couples are nearly twice as likely to discuss vacation
plans than to talk about financial goals.
*Most high-net-worth investors are willing to sacrifice potential return if
doing so increases the certainty of funding their goals.
Goals Driven Investing at Northern Trust involves collaboration between
clients and their advisory teams around identifying and quantifying both life
goals and financial assets, including real and human capital. Advisors use
innovative and proprietary technology that takes multiple inputs about future
goals, applies a set of dynamic discount rates to determine their present
values, assigns those values against each client's assets and constructs
customized investment strategies aligned with each goal. The process gives
clients a higher degree of confidence in their financial future by enabling
them to understand whether their assets are sufficient to fund their goals, as
well as providing a framework for addressing any excesses or shortfalls.
“This disciplined approach provides clients with a clear understanding of the
rationale supporting investment recommendations,” said Katie Nixon, Chief
Investment Officer for Northern Trust Wealth Management. “Creating a deeper
connection to financial plans and portfolios increases client confidence in
achieving their goals, even during periods of adverse financial market
Each client's needs, goals and aspirations are carefully inventoried and
converted into explicit financial liabilities. Client assets are matched to
each liability based on size, duration and character of the liability.
“With our method, the perception of investment success is no longer
performance relative to a market benchmark, but something more concrete and
rewarding: the successful accomplishment of personal goals,” Nixon said. “As
goals are met or changed depending on life circumstances, a client's asset
allocation also changes. Our approach also captures the changing nature of
risk as well as the evolution of a client’s unique risk preferences.”
To learn more about Goals Driven Investing and Northern Trust’s survey, visit
Northern Trust’s nationwide survey of wealthy individuals seeks to highlight
important wealth management issues. The online interviews were conducted by
Phoenix Marketing International and NIA Enterprises between November 16 and
December 17, 2012. The data contained in this report came from 1,700 online
interviews and has a margin of error of +/- 2.4 percentage points at a 95
percent level of confidence.
Northern Trust is a premier wealth management firm that specializes in
goals-based financial advice. We offer clients insightful perspectives and
creative thinking, backed by innovative technology and a strong fiduciary
ethos. Northern Trust is ranked among the top 10 U.S. wealth managers with
$197.7 billion in assets under management as of December 31, 2012, and more
than 70 wealth management offices in the United States and abroad. The
Financial Times Group has named Northern Trust Best Private Bank in the USA
for four consecutive years. In 2012 Northern Trust was also named Best Private
Bank globally for Innovation and Best Private Bank for Socially Responsible
About Northern Trust
Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of investment
management, asset and fund administration, banking solutions and fiduciary
services for corporations, institutions and affluent individuals worldwide.
Northern Trust, a financial holding company based in Chicago, has offices in
18 U.S. states and 16 international locations in North America, Europe, the
Middle East and the Asia-Pacific region. As of December 31, 2012, Northern
Trust had assets under custody of US$4.8 trillion, and assets under investment
management of US$758.9 billion. For more than 120 years, Northern Trust has
earned distinction as an industry leader in combining exceptional service and
expertise with innovative products and technology. For more information, visit
www.northerntrust.com or follow us on Twitter @NorthernTrust.
Northern Trust Corporation
Amy Bickers, 312-444-3097
Bailey Madden, 312-557-1314
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