SD-01.14 — Goals-Based Planning

Business Domain: BD-01 Investment Strategy & Allocation (Front office) · Applies: BOTH

Purpose

Frames and maintains the client’s prioritised goal hierarchy — the strategic artefact the goals-based paradigm allocates against. The goal hierarchy is the unit of demand the wealth manager runs strategy on: each goal carries a target value, a time horizon, a priority layer (safety / lifestyle / aspirational), and a required probability of success. SD-01.14 owns the framing of that hierarchy as a strategy-layer record, prior to allocation — it elicits the goals, prioritises them, organises them for allocation, governs the once-per-client transition into and out of the goals-based paradigm, and maintains the funding-adequacy assessment that records whether each goal is on track on current funding and contributions.

It is not SD-01.13 Goals-Based Allocation — SD-01.13 allocates to meet the hierarchy SD-01.14 frames, translating it into per-goal target allocations and the assembled household portfolio. The division is one of capability type: framing-the-goals is a strategy-layer capability (the goal hierarchy is the strategic statement of what the household’s capital is for) and belongs in BD-01, while advisory-delivery — the comprehensive financial plan, estate and wealth-transfer strategy, behavioural advice, family governance — sits in BD-15 as SD-15.15 Financial & Wealth Planning. SD-01.14 frames the goals as strategy; SD-15.15 wraps the advisory delivery around them; SD-01.13 allocates to meet them.

Service Operations

Frame the goal hierarchy — elicit, prioritise and maintain the client’s goals; for each goal record its type (retirement / education / legacy / major purchase / lifestyle / philanthropic), time horizon, target value, priority layer (safety / lifestyle / aspirational), and required probability of success.
Maintain the funding-adequacy assessment — track whether each goal is on track on its current funding and contribution stream, surface the funding gap where one exists, and re-assess as circumstances change.
Govern the goals-based paradigm shift — manage the once-per-client transition from an asset-only allocation paradigm to goals-based, and back where the client’s circumstances change; the boundary case the goals-based body of knowledge treats as a discrete advisory event.
Frame the goal hierarchy for allocation — hand the prioritised hierarchy to SD-01.13 Goals-Based Allocation in the form SD-01.13 consumes (the goals organised for the safety / lifestyle / aspirational layering, each with its horizon, minimum required return and required probability of success).
Maintain the goal record across the goal’s life — record the lifecycle status of each goal (proposed / active / met / abandoned / revised) and the changes that move it between states.

Inputs and outputs

Inputs: the client’s circumstances, objectives and household composition (the client profile from SD-15.12 Client Advice & Suitability); the SD-15.15 advisory inputs (the comprehensive financial-plan view that contextualises the goals); the household’s assets, liabilities and external holdings; the E-31 Goal Progress Measurement record from SD-09.5 (the measured probability of meeting each goal — the funding-adequacy reassessment input).
Outputs: the prioritised E-30 Goal hierarchy and the funding-adequacy assessment — consumed by SD-01.13 Goals-Based Allocation (the per-goal sub-portfolio allocation), SD-15.15 Financial & Wealth Planning (the advisory delivery the hierarchy sits inside), SD-09.5 Investment Analytics & Insight (which computes the probability-of-meeting-goal forward-looking measure per goal), and SD-15.14 Client & Investor Reporting (per-goal progress reporting to the client).

Entities

Consumes: E-01 Legal Entity (the client / household), E-03 Portfolio / Mandate (the funding sub-portfolios per goal), E-31 Goal Progress Measurement (the SD-09.5 probability-of-meeting-goal measure — funding-adequacy input), E-33 Financial Plan (from SD-15.15 — the comprehensive advisory plan the goal hierarchy sits within; the plan contextualises and feeds back into the hierarchy framing).
Owns: E-30 Goal — the client’s investment objective the goals-based paradigm allocates against: target value, target date, priority layer, required probability of success. The funding-adequacy assessment and the goal-hierarchy structure remain analytical artefacts of SD-01.14; the candidate Goal-Hierarchy entity is logged as an open extension.

Standards

The CFA Institute Private Wealth Management body of knowledge — the goals-based wealth-management curriculum, the three-tier priority layering, the goals-based allocation paradigm as one of the three CFA-recognised approaches to asset allocation (asset-only, liability-relative, goals-based).
The goals-based-investing body of knowledge — Jean L. P. Brunel, Goals-Based Wealth Management (Wiley, 2015) and Ashvin B. Chhabra, The Aspirational Investor (HarperBusiness, 2015) and the underlying “Beyond Markowitz” framing of the personal-risk / market-risk / aspirational-risk goals tri-bucket.
The behavioural-finance mental-accounting literature — the recognised foundation for treating each goal as its own mental account with its own risk tolerance, rather than a single utility function over total wealth.

Open extensions

The Goal Hierarchy structure entity — the parent / child and dependency relationships between goals (a legacy goal contingent on a retirement goal being met first), if the dependency structure becomes worth modelling as a first-class record rather than as analytical structure on the Goal set.
The funding-adequacy sub-model — how required contributions are derived from a goal’s target, horizon and current funding, including the boundary with SD-01.13’s per-goal probability-of-success modelling.
The relationship between SD-01.14’s goal-hierarchy framing and the behavioural-advice operations of SD-15.15 — the precise advisory hand-off between the strategy framing and the advisory delivery.