Thoughts on the optimal process for achieving your financial goals (spoiler alert: this is our process!)
In a word, it’s all about “efficiency.” I will make the comparison of your financial life to an automobile. Your financial assets (“money”) are the gasoline in the tank—the fuel for your financial life.
The gasoline (money) doesn’t make you happy. What makes you happy is the journey. We attempt to make that journey as “rich” as possible. Of course, you are in charge of your own happiness but we are here to help with your gasoline “burn rate.”
For example, some folks are happiest with a hybrid vehicle—burning a low amount of fuel and using the carpool lane. Alternatively, other folks are happiest with a 1969 Corvette and prefer to continually step on the gas and burn it fast!!! You can imagine the difference in fuel consumption (cash flow, in our analogy) in one of the cars versus the other. Likewise, if you work on your Corvette and spill gas on the garage floor while you are welding . . . it can be explosive. Think of money and drugs.
We believe the optimal approach for a successful financial journey is comprehensive in nature and addresses the many issues you may encounter along the way.
Here are the services/processes (and car analogies) you will find at shops that embrace our approach.
Risk management efficiency. A car needs brakes even though its primary purpose is to “go.” We analyze risks on many fronts: house, auto, umbrella, disability, long-term care, tax positions, portfolio risk, and estate issues. The process is not just about insurance but about analyzing and managing risks, too. For example, maybe you can accept a $5,000 deductible on your homeowners’ insurance if it drops your premium $600 per year?
Investment efficiency. You run your fuel thru a gas filter to remove impurities and tune your car regularly to keep it operating smoothly. Likewise, we rebalance portfolios, find the right asset allocation, use low-expense mutual funds, and control trading costs. The investment approach is built around the client, not around the money and the most recent market movements.
Retirement efficiency. Running out of gas (money) might be clients’ biggest fear even though it may not actually be their biggest risk. We assess that risk and address that concern by running an “retirement income analysis” and reviewing it with the client. If you are 30, what do you need to save and invest to reach your goals? If you are 70, what withdrawals can you take and how shall we invest your money? With information, clients can adjust their saving/spending behaviors. We love to hear questions like: “Can I afford to pay my granddaughter’s college tuition for 4 years and still make it?” Let’s see if you can!
Tax efficiency. Having a front-end alignment increases your gas mileage and lengthens the life and safety of your tires because there is less friction between the tires and the road. Tax efficiency in your portfolio (pay less taxes) creates less friction between you and Uncle Sam and makes your journey more enjoyable.
Estate efficiency. When you sell your car, will you disassemble it and sell the tires, engine, windshield wipers, taillights, and trunk separately? That’s inefficient. When you settle your estate, we look for efficiencies to save taxes and more importantly, to meet your legacy goals. Making one child the executor who makes decisions that affect his/her siblings might be a formula to ruin relationships. Splitting everything 50-50 might be a bad formula when one child works in the family business and the other doesn’t. Efficiency after your death can keep relationships intact instead of adding fuel to potential fire.
If there’s enough gas in your tank, you can have fun in your 1969 Corvette. We will monitor that risk and maybe recommend downgrading to a Toyota if you need to reduce your fuel consumption. We will always encourage responsible behavior and hope to provide you with the right octane! Now, let’s hit the road!