The Cambridge System
The Cambridge System is a revolutionary approach to financial
planning. The brainchild of Bert Whitehead, MBA, JD, it rejects the traditional
approach to financial planning (including the financial plan document and asset
allocation models developed for institutional investors) and instead places emphasis
on the needs, including taxes and personal real estate, of real people. The Cambridge
System uses innovative tools and decision-making rules that are much different
than the standard process taught in the Certified Financial Planning (CFP) training
programs. The methodology is practiced by 160 CFPs across the US, with thousands
of clients in one-on-one, interactive relationships. The Cambridge System advocates
fiduciary advice on a fee-only basis.
More specifically, the Cambridge System analyzes the core
beliefs and financial dysfunctions of investors that may be impede them from achieving
financial peace of mind. The system also supports the belief that investors must
base their financial decisions on endogenous factors (e.g., our stage of life, occupation,
marital status) rather than on the exogenous factors (e.g., world affairs, interest
rates) that are typically pushed by “financial experts” in the media.
Functional Asset Allocation (FAA) is used in the Cambridge
System rather than the more widely used modern portfolio theory. In contrast to
modern portfolio theory, FAA incorporates holistic fee-only financial planning for
the vast majority of investors who must work for a living and accumulate and invest
sufficient capital to fund retirement.