FAQ
How is Life Driven Investing different from a standard asset allocation model?
A standard allocation assigns money to asset classes based on a risk tolerance score and a target date. Life Driven Investing assigns money to time horizons based on when you actually need it and what it's for. The practical difference is that LDI creates explicit band separation so near-term money is never at market risk and long-term money is never disrupted by short-term needs. In a standard allocation model, all dollars are exposed to the same volatility regardless of when they're needed. In LDI, the portfolio structure itself is the primary risk management tool.
What goes in the 10-plus year band for high earners?
For executives with genuinely long time horizons in their long-term band, this sleeve can include global equity, international diversification, and for accredited investors, alternatives such as private equity, private credit, and real estate. These assets carry illiquidity premiums that are only worth accepting when you have time to absorb them and your shorter-term bands are fully funded. Alternatives in the growth sleeve should be sized to your overall liquidity needs, not just your risk tolerance. Subject to eligibility, suitability, and your overall plan structure.
How do I handle RSU vests inside the LDI framework?
RSUs are treated like cash compensation with equity risk attached. At vest, the tax is addressed first, typically through sell-to-cover. The remaining proceeds are then routed to your time bands based on which ones are underfunded relative to your goals. A common approach is to allocate a portion to the near-term band if it needs topping off, a portion to mid-term goals, and the remainder to the long-term growth sleeve through dollar-cost averaging. The specific split depends on your band balances, your upcoming goal timeline, and your current concentration risk. Rules set in advance remove the emotion from the decision at vest time. For the full equity calendar framework, the Executive Compensation Planning 2026 Playbook covers it in detail.
What is sequence of returns risk and why does it matter more than average return?
Sequence of returns risk is the danger that poor investment returns early in a withdrawal period, when you're selling assets to fund living expenses, permanently impair your portfolio even if the long-term average return is the same as someone who had good early years. Two investors with identical average returns and identical withdrawals can end up with dramatically different portfolio balances at year ten simply because of the order in which returns arrived. The investor who had bad years first was forced to sell more shares at depressed prices, which means fewer shares left to recover when the market turned. Pre-funding three to five years of withdrawals in stable, non-market sleeves eliminates this forced selling entirely.
How does Tailored Wealth implement the LDI framework for executive clients?
We start by mapping your next one, five, and ten-plus years of cash needs to specific goals and timelines. Then we inventory every account, every dollar, every equity comp event and assign each to the appropriate band based on when it's needed and its tax treatment. We use professional financial planning software to model the full picture, run scenario analyses for equity events and major spending decisions, and optimize asset location across your taxable, pre-tax, Roth, and HSA accounts. Through our Quarterly Strategy Rhythm, we rebalance the bands as goals approach, top off near-term sleeves from equity proceeds, and update the model as your comp structure and life timeline evolve. The portfolio serves the plan, and the plan serves the life.