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but greater risk can also lead to greater short-term losses. The financial services industry — and the media — tends to compound the problem by relying on numerous ways to count, measure and dissect invest- ment choices and news, often without regard to whether or not the minutia actually adds value. Such activity plays right into an investor's short-term focus on how they believe the markets are performing. When an investor's short- term focus is validated by a similar industry perspective, it is easy to see why he or she would have a difficult time staying on course. A Prescription for Success The first step to avoiding a disconnect between short- and long-term perspec- tive is to establish firm financial goals and stay focused on them. This is, of course, easier said than done — par- ticularly when being bombarded by information, as we are on a daily basis. The most meaningful way I've found to keep investors focused on their goals is to clearly define what those goals are and then, articulate them in an investment policy statement, which serves as a history of the investor's decision-making process and can provide guidance during times of market upheaval. The second step is to adjust some port- folios based on the individual investor's ability to tolerate risk. This can be done by eliminating specific assets or asset classes that may lead to a more efficient portfolio but might be especially volatile. While this strategy may lead to a suboptimal portfolio, it could be the difference between investors being able to weather a severe market downturn and being forced to exit the market with their long-term objectives derailed. It takes time — sometimes years — and a desire on the part of a financial advisor to thoroughly understand the client to help in this capacity, but it could very well be the difference between achieving long-term goals and not. The third — and most important — step is to create an effective monitoring and feedback process. This component is critical to identifying, understanding and addressing mistakes. It also helps keep clients focused on their longer-term objec- tives. Above all, a relationship between investor and advisor that is built on mutual trust is the key element required for the feedback loop to be effective. Bill Strand, Founder and Principal, has more than 30 years of experience in the financial services industry, and founded Paradigm: Strategies in Wealth Management LLC in 1995. Strand has particular expertise work- ing with physicians helping them not only achieve financial success but devising creative strategies to preserve the wealth they have worked so hard to build for themselves and their families. Strand meets a lot of doctors who are extremely busy practicing medicine, but they have no investment plan for financial indepen- dence. Find out more at planparadigm.com or by contacting Strand at 763-201-1025, or via email at bstrand@planparadigm.com. ■ M D N E W S . CO M ■ MD NEWS Minnesota | 1 5