Link - http://www.thinkadvisor.com/2013/04/29/ ... ing?page=1At its heart, life-cycle investing is the theory of how an individual should go about creating life-time financial security. “You’re matching a coherent economic theory with what the client wants to do. Life-cycle is about optimizing everything, [especially] your future self,” Hogan stresses.
When used for comprehensive financial planning for individuals, life-cycle also applies principles from the pension world. In this goals-based investing philosophy, goals are funded in priority order. “No matter who you are, you have a limited amount of money. So you want to make sure that the goals you care most about are funded before you run out of money,” Hogan notes.
The cornerstones of life cycle are: (1) human capital—what people do in the world with their skills and talents, and how they are remunerated and (2) that most people care more about lifetime standard of living than about portfolio wealth. These priorities change the focus of attention from the portfolio to the client and in so doing, from return management to risk management.