Would you tell me, please, which way I aught to go from here?
That depends a good deal on where you want to get to.
I don’t much care where.
Then it doesn’t matter which way you go.
So long as I get somewhere.
Oh you’re sure to do that, if you only walk long enough …
-Exchange between Alice and the Cheshire Cat, Alice in Wonderland by Lewis Carroll
I often find myself recalling this exchange when discussing retirement planning. We’ve all heard the saying “failing to plan is planning to fail,” but we seldom take the time to plan when it comes to our money. The tendency is to say, “I’m doing okay, so why take the time to plan when nothing is really broken?” Yet it’s not necessarily a matter of whether anything is broken. It’s about defining what retirement looks like for you. There is no one right answer or destination that is retirement. It looks different for everyone. Some want to go on adventures, while others strive to simplify. Regardless, that definition will be the key to creating your plan.
Looking into the future requires you to reach deeply into yourself, which can be an emotional process (and it’s hard work). I’ve found that when people take a step back to get a clear and concise understanding of where they currently are, fear and anxiety subside enough for them to open up about what they really want to accomplish with their money.
Turn on the Lights
If my daughter is scared that there’s something in her closet at night, all I have to do is turn on the lights to show her that there’s nothing there. When it comes to financial planning, it seems that the reason many people avoid it is because they’re afraid. They fear what they don’t know. They fear that the truth and reality of their situation will be ugly. Many of us identify ourselves by the amount of money we have and therefore want to make sure people know how much we have, or make sure they don’t find out how little we have. They believe everyone else has their plans all figured out. People craft incredible stories in their heads that justify avoidance of a financial plan. But they’re nothing more than that – stories.
My first piece of advice is to stop telling yourself the stories that are causing you stress and fear, and instead, focus on taking the next step. Ask yourself:
- Where are all my assets, how much are they all worth, and how long will it take me to figure that out?
- How much does my current quality of life cost and can I sustain that?
If people don’t have a good answer for these questions, it usually has a paralyzing affect and they are in need of “turning on the lights” in their financial world. Most family’s funds are limited. Many know that they have goals that are unattainable if they continue on their current path, but we often don’t want to live realistically with our money. Most people understand that everyone needs a plan, but few take the time to put in the work to build one. They acknowledge they need to do it and think that’s enough. This is as far as they ever get until chaos happens – and it always does.
Choose your path
When the wise commit to building a financial plan they are then met with another tough decision, which path to take. In recent years technology has empowered the “do-it-yourself” investor. We’re now seeing the rise of the robo-advisor, and many people have a distaste for financial advisors. There are, however, many misconceptions about what an advisor can and should be doing in your best interest. Many advisors will paint a great picture of all they’ll do for you once they have your money, in the hopes of gaining your trust and your assets. Much of this is nothing more than lip service, but it’s typically all that the general public is exposed to. Few people know about, or think they are a fit for, professional money management, so they don’t experience anything beyond the cookie cutter, and those who advocate for clients to “buy” their investment advice.
So how can you begin to evaluate who to trust when it comes to your money? It all starts by working with someone who will take the time to assess your goals, where you stand in relation to those goals, and what you need to do to get there. You’ll never be able to reduce your fear and anxiety if you don’t do this. Many advisors can help get you there, taking you down different paths to get you to a similar spot. But that doesn’t mean the experiences along that path are similar.
The Krilogy Experience
Krilogy is an independent RIA firm, which means we differ from traditional brokerage firms because of our fiduciary responsibility to act in the best interest of our clients at all times, not just at the onset of the relationship, but on a continuous basis. All advisors will tell clients they do this (and most do), yet RIA firms are legally bound to do so. We deliver on this promise. Our goal is for our clients to experience comfort while on the path towards their goals. The feeling that comes along with knowing where they stand and they’ve accomplished the necessary items in order to give themselves the greatest probability of success. Below are some crucial areas where we’ve been able to add value:
- Income and Spending … the biggest misconception Americans have when it comes to money is their spending. Most spend more than they think, but it’s not my job to tell you not to spend. It’s my job to put a process in place to help you track your spending, specifically as it relates to your income and savings goals. This is the foundation of your plan, as if you spend too much, you will be unable to meet your savings goals and your plan will always be off track. If you’re doing it alone without an advisor, I recommend a tool such as Mint.com to track spending and debt levels. Monthly cash flow reviews are one of the most vital steps for our clients to ensure they stay on track, giving them tools and direction to accomplish this on their own. Like most things that are worthwhile, this takes work.
- Your Assets and Liabilities … what makes up your financial picture today? Whether you already have a 401k plan, investments, or itemized debt you’re working to pay off, all of these pieces are important in determining how you’ll get to where you want to go in retirement. We’ll put them all in one place so you can easily see what you have, and how they fit in to your overall financial plan. Many times we’ve had to go through this process when getting a loan or re-financing. But that was a while ago, and things change. Our platform provides our clients a picture of their entire financial world that updates on a daily basis. A click of the button gives them a view of everything they own, at that particular moment.
- Projections and Scenarios … based on how much you’ll be able to save on a regular basis, we’ll begin preparing a plan and show you potential scenarios for where you might be, financially, in retirement. Here, we take into account various tax implications, anticipated inflation, and other factors which may affect your plan and finances in retirement. We’ll show what you need to do in order to live those ideal days in retirement, live the way you want, and do what you’re dreaming of. Our clients love the fact that we can show them how certain decisions today will affect them over the long term.
- Performance Tracking … our clients understand how much they’ve invested with us over the long term, and how much it is worth. It’s the ongoing accountability that we think they expect, and deserve. Many people are tired of looking at multiple statements at the end of the month and trying to figure out how they are doing overall based upon multiple accounts with varying returns. We provide our clients with an overall view of the returns for all of the accounts that we manage for them. One return, net of fees, whenever they want to know. Our fees are right there for them to see on their statement. No more wondering what you are paying for advice.
Don’t Get Lost
Your financial plan is a roadmap that provides direction. That means when you reach that fork in the road, like Alice, you won’t have to wonder which way you should go. Your plan will tell you. It’s a tool you can rely on to help guide decisions about things like buying a new house, taking a dream vacation, or funding your kids’ college. We’ll continuously monitor the plan to make sure you still want to go where the map is guiding you, and show how it’s helping you get there.
Ask for Help
An amazing thing happens when you ask for help. You get it! My job as an advisor isn’t to sell you anything, or judge your situation. My job is to help you envision your future, create a plan that starts with where you are now, and educate you on the universe of tools that are available to you in order to reach your destination. While others promise this once you’ve hired them to manage your money, we do this work upfront in the hopes that you hire us going forward. Once you’re a client, our investment team monitors your portfolio each day, making adjustments to keep your plan on track and analyzing market trends and various economic scenarios to anticipate how you’ll be impacted.
If you’re at a “fork in the road” and aren’t sure which way to turn, the Krilogy team can help. Don’t just shoot for walking a long time and ending up somewhere. Define your destination, and follow a map to get there.
