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Financial Planning Services

Most people are in great need of personal financial planning. They have certain basic financial goals they want to attain, but such objectives usually are not precisely defined. To help meet their goals, a bewildering array of investments, insurance, savings plans, tax-savings devices, retirement plans and the like is constantly being offered to the public, but these financial instruments and plans are presented in a piecemeal fashion. Furthermore, consumers are faced with a dilemma because of the affluence in our society, in which more and more people can benefit from the more sophisticated financial planning techniques.

What is personal financial planning?

Personal financial planning is the development and implementation of total, coordinated plans for the achievement of one’s overall financial objectives. The essential elements of this concept are the development of coordinated plans for a person’s overall financial affairs based upon his or her total financial objectives. The idea is to focus on the individual’s objectives as the starting point in financial planning, rather than emphasize the use of one or more financial instruments to solve only some financial problems. Because of the comprehensive nature of financial planning, it must be coordinated with all the other members of the planning team— accountant, investment advisor and insurance agent. The planning process can be divided into six stages:

  1. Data gathering
  2. Establish goals and objectives
  3. Process and analyze information
  4. Recommend a comprehensive plan
  5. Implement the plan
  6. Monitor the plan.

So, who needs Financial Planning?

Everyone whose financial aims are not yet defined or fulfilled. Those with high incomes or substantial business or property interests may require a more sophisticated plan. However, even those with modest income or assets may actually have a greater need for discipline in financial matters. Some of the more significant needs are:

  • Retirement
  • Build an estate
  • Reduce income tax
  • Education planning



The capital markets have changed dramatically over the last few decades. Money management has undergone a concurrent evolution. In the early 1990s, the term asset allocation did not exist. The simple view of diversification was simply to "avoid putting all of your eggs in one basket." The argument was that if all of your money was placed in one investment, your range of possible outcomes was very wide—you might win very big, but you also had the possibility of losing very big.

Alternatively, by spreading your money among a number of different investments, the likelihood was that you would not be either right or wrong on them all of the time. There was an advantage, therefore, in having a narrower range of outcomes.

In our marketplace today, it is very difficult to imagine that the market price of any widely followed security will depart significantly from its true underlying value. Such is the nature of an efficient market. Modern portfolio theory has as its foundation the notion of efficient capital markets. As this body of knowledge developed, the focus of attention has shifted from individual securities to the portfolio as a whole. Modern portfolio theory has redefined the notion of diversification.

Major emphasis must be placed on finding baskets that are distinctly different from one another. This is extremely important because each basket’s unique pattern of returns partially offsets the others, with the effect of smoothing overall portfolio volatility.

According to Brinson, asset allocation has become associated with successful investment management. Asset allocation is portfolio management at its most important level and not just another name for the "timing" game.

Asset allocation is involved with the investment structure of a multi-asset portfolio. It is the investment process that brings together into one portfolio the widely different attributes and characteristics of various asset classes. It attempts to optimize the mix of asset classes relative to a set of objectives that usually contain preferences or attitudes pertaining to risk or return. Generally an investor forms an investment policy and thereby a normal portfolio mix to satisfy those specific objectives. This is accomplished by defining the normal investment characteristics (risk, return and covariance) of each asset class. Asset allocation means deviating temporarily from the normal policy mix. It is based upon judgments that one or more asset classes are in a state of dis-equilibrium with respect to the investment characteristics that were utilized in forming the policy mix.

In summary, asset allocation decisions focus upon understanding current conditions in the various asset classes and judging whether current investment characteristics are in or out of the equilibrium state that was used in determining the investor’s normal asset allocation mix. These are the fundamental investment considerations linked to the underlying cash flows associated with long term investment results.


In this age of lightning quick information, global markets and a sea of new investment alternatives, you may find yourself slightly overwhelmed when it comes to selecting prudent investments. Unless you have a lot of time on your hands, access to sophisticated research, and no small amount of financial savvy—not to mention a nerve of steel—chances are you could benefit from the services of an expert. What we have done in the Boro Capital Asset Management program to alleviate this problem is to collate all this investment advice information into a resource pack for easier dissemination to our clients.


In investment management, risk is often equated with the uncertainty (variability or standard deviation) of possible returns around expected returns. However, investors do not think in terms of expected returns or standard deviation. More often, they rely on what is in the dictionary: the chance of loss.

Most investment advisors are in agreement that it is more accurate to think of investors as typically being loss adverse rather than risk adverse. For example, the variability of returns that investors experience from one year to the next may not be particularly troublesome so long as there are no negative returns. Beneath the psychology of loss aversion lurks a conviction by some that negative returns represent permanent capital losses.

Another problem with the loss adverse psychology is that investors tend to think in terms of nominal rather than real returns. Many investors would feel better about earning 5% after taxes in a 12% inflationary environment than they would about losing 1% with a 4% rate of inflation. The positive nominal gain of 5% creates the illusion of getting ahead, although adjusted for the 12% inflation; the real loss is 7%. In actuality, the investor would be better losing 1% or a smaller real loss of 5%.

The task is to sensitize the investor to all of the risks that they may face, then to prioritize the relative dangers of these risks given the context of the situation. This is why we explore the impact of time horizon on the investment management process. It is only in reference to the relevant time horizon that we could determine whether volatility or inflation was the greater risk. For the long- term investor, volatility is not the major risk; inflation is.

Most investors do not know how to realistically assess the risks they face. By default, they tend to assume that the familiar and comfortable path is the safe path, whereas anything unfamiliar or uncomfortable must be risky. Many people who are heavily invested in real estate with high financial leverage consider themselves risk averse and fearful of common stocks. Yet, when the risk of such highly leveraged equity investing is pointed out, the usual response is "there is no risk because I understand it and am comfortable with it!" The real issue is the amount of volatility the investor can tolerate.

Our task, at Boro Capital, is to provide a frame of reference that enables clients to correctly perceive risks within the context of their situations.


Most experts believe that you should try to set 70-80% of your current income as a retirement goal. However, since people are living much longer and in many cases, retiring early, don't forget about your dreams for retirement-- traveling, hobbies, etc. Also, medical costs and long term care cannot be overlooked. Without careful planning, an individual's entire estate could be decimated.

It has been said that time consumes all things. The rapid passage of time can quickly consume the dreams that we have for retirement. We, at Boro Capital, would like to sit down with you and review your circumstances so that the "golden years" will truly be golden.


How would you react if the wealth you took a lifetime to build was suddenly reduced in half and/or distributed to others to whom you did not intend?

How much money does it take to meet the personal and family needs, in the event of your death, retirement or disability?

Louis D. Brandeis was a Supreme Court Justice from 1919 to 1939. The following are some of his thoughts on tax avoidance:

"I lived in Alexandria, Virginia. Near the Supreme Court chambers is a toll bridge across the Potomac. When in a rush, I pay the toll and get home early. However, I usually drive outside the downtown section of the city and cross the Potomac on a free bridge. The bridge was placed outside the downtown Washington, D.C. area to serve a useful social service: getting drivers to drive an extra mile to help alleviate congestion during rush hour.

"If I went over the toll bridge and through the barrier without paying the toll, I would be committing tax evasion. However, if I drive the extra mile outside the city of Washington and take the free bridge, I am using a legitimate, logical and suitable method of tax avoidance, and I am performing a useful social service by doing so.

"For my tax evasion, I should be punished. For my tax avoidance, I should be commended. The tragedy in life is that so few people know that the free bridge even exists."

The estate tax rates are very onerous, so it makes sense to find the free bridge.


Some people accomplish success early in life; others work most of their lives to accomplish it. In either case, once success is accomplished, the human spirit strives for an even greater accomplishment: personal significance. For a selected few, significance is attained through a distinguished political career. For most, however, philanthropy is the ultimate path to significance.

"The highest and best use of capital is not to make more money, but to make money do more for the betterment of life."
Social Capital can be described as that part of your total wealth, consisting of income and assets that you have earned but are not allowed to keep. Social capital consists of a part that you do not control, government directed or taxes and that part that you may control, self-directed as in charitable trusts. It is the latter that empowers us to direct the fruits of our labor. It allows you to personally and powerfully affect the future and leave a lasting legacy.

By setting up one or more charitable trust instruments, you can personally and powerfully impact your community or other institutions that will perpetuate the principles and values that most accurately reflect your own values.
In effect, you can become a philanthropist by simply choosing to self-direct your social capital or instead choose the default to the government, as in taxes. Of this you can be certain; significance is never accomplished through defaulting to someone else’s agenda!

Therefore, the secret to attaining personal significance, secure in the knowledge that your life has made a difference, is to make the decision to self-direct your Social Capital through a charitable trust or family foundation. And all of this significance can be accomplished without a reduction in current income or disinheriting your children and heirs. It’s all in the planning!


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