The Best Laid Plans December 2016
A solid financial plan can make life easier. It informs how you spend, save, invest and
even imagine your future. It’s a support
system.
That’s what makes them so risky when done poorly or with the
wrong intentions.
Wall Street offers financial planning for two reasons. The first is to learn enough about a client to
cross-sell them as many products as possible.
The nobler reason is to learn as much as you can so you can do what’s
right for them.
The printed reports look the same. If clients even notice, it will be through
their planner/advisor’s constant commitment.
A plan isn’t a one-time presentation.
It’s a process.
Advisors need to update these plans frequently. Your life will change. Your money will change. If he (or she) doesn’t keep track, you won’t
know how you’re doing.
The plans themselves need periodic maintenance. I reprogram the interest rates in my bond and
cash forecasts. That’s critical because
the default interest settings in these software packages are two to three times
higher than we can find in the market today.
Even new plans are much too optimistic out of the box.
This year I’ll stress-test everyone’s plans with a bond
bear-market scenario. That’s item one on
our next meeting agenda – and every meeting from then on. It makes for a long day but the most
important thing I can ever do for the people I serve is keep them from trying
to retire on income they won’t get.
Which brings us to your advisor.
Interest rates are as low as they have ever been. If he hasn’t dragged you in the office lately
to explain how he recalculated your lifetime income estimate, reread paragraph
3 above. It’s a conversation focused on
the goal of not running out of money.
You’d remember it.
I review a lot of plans for folks who suspect their advisor hasn’t
kept-up. They’re almost always
right. I can usually tell them if their
plan has any hope of hitting their goals very quickly. Explaining why doesn’t take very long either.
The hard part is getting them to bring their plan in.
These impressive volumes still have defenses long after they
are doomed.
·
It was a reputable firm,
·
He has credentials,
·
I paid four grand!
·
I’d introduce you but she already has a
planner,
·
I’m sure my investment firm monitors my
plan,
·
Wall Street will take care of me.
Have I mentioned paragraph 3 lately?
If your plan isn’t getting much love, bring it by the office
for a quick check-up. I can probably
tell if you are on-track before you finish your coffee. There will be no charge or obligation. Spouses are encouraged and welcome.
Thanks for reading and please forward this to someone who
has a neglected plan of their own. sh
The opinions voiced in this material are for general
information only and are not intended to provide specific advice or
recommendations for any individual.
